Shareholder Value

Stewart Millington Business Mentor

Acquisition & Sale – The Process

Is your company ready for sale?

What influences the price?

Where does acquisition fit in the strategy & am I ready to

make an acquisition?

The targeting process

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Is your company ready for sale?

Where does acquisition fit in the

strategy?

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Two Key Questions

The Role of the Managing Director

Company Foundation

The Profit Engine

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Management Strategy

The Role of the Managing Director

Company Foundation

The Profit Engine

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Management Strategy

The Role of the Managing Director

Company Foundation

The Profit Engine

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Management Strategy

The Role of the Managing Director

Company Foundation

The Profit Engine

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Management Strategy

Company Strategy

Time – the Hidden Cost

Buying or selling a company takes up a huge amount of

time.

It is a highly skilled role that only the MD or Senior

Director can undertake.

While undergoing this process, it is imperative that you

keep delivering the financial numbers.

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What Influences the Price?

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What Influences the Multiple?

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Multiple Influencers

Company

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Multiple Influencers

TRUE

GROWTH

Company

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TRUE

GROWTH

Company

Risk

Multiple Influencers

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TRUE

GROWTH

Company

Multiple

Multiple Influencers

Risk

True Growth - Equity Valuation Drivers

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Benchmarked performance against competition

Turnover Growth

Profit Ratios

Equity Valuation Drivers

Income – The Client Base

The Four Areas of Management

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Brand Name

Company Strategy

Company Positioning

Brand Name

Strategic Track Record

The Four Areas of Management

Multiple

Equity Valuation Drivers

Income – The Client Base

The Four Areas of Management

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Brand Name

Company Strategy

Company Positioning

Brand Name

Strategic Track Record

The Four Areas of Management

Multiple

Equity Valuation Drivers

Income – The Client Base

The Four Areas of Management

www.avondale.co.uk

Brand Name

Company Strategy

Company Positioning

Brand Name

Strategic Track Record

The Four Areas of Management

Multiple

Equity Valuation Drivers

Income – The Client Base

The Four Areas of Management

www.avondale.co.uk

Brand Name

Company Strategy

Company Positioning

Brand Name

Strategic Track Record

The Four Areas of Management

Multiple

Equity Valuation Drivers

Income – The Client Base

The Four Areas of Management

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Brand Name

Company Strategy

Company Positioning

Brand Name

Strategic Track Record

The Four Areas of Management

Multiple

The Targeting Process

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What is your acquisition strategy?

What are you looking to acquire and why?

Why should they sell to you?

How are you going to convince them to sell if they are not

for sale?

How are you going to leverage the acquisition?

Cost savings alone are not enough.

Truly successful acquisitions always have the

“additionality” factor

Targeting Criteria

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The Management of Risk

1. Market

2. Company

Targeting Criteria –Market Sector

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Market size

Market growth

Profitability/margin potential

Strength of competition

Strategic fit with your own company

Weight each criteria and score all sectors

Target Map

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Market Segments

Market Segments

Geographical area

Product/Service Sectors

Targeting Process

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Geographical Area

Market Segment

Market Segmen

t

Market Segmen

t

Market Segmen

t

% A B C D

Product/Service Sectors

Product/service 1

90 10 50 80

Product/service 2

60 50 25 70

Product/service 3

45 40 60 65

Targeting Criteria – The Company

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Benchmarked financial performance vs competition

The quality of the income stream and clients

The strength of the management team and systems

Brand name and reputation

Strategic track record and pipeline

Size of target/fit with your company

CULTURAL FIT

Think Long, Think Hard & then be bold

If in doubt – DON’T.

Better to walk away and write of the time and

money spent rather than to proceed.

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Key to Success

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Be prepared

Invest time

Be strategic

Seek advice