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Insights

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Path to Control M&A Deals: Strategic Benefits and Situations Where They Are Advantageous

By Zachary Cefaratti | 10 July, 2024
Path to control M&A deals involve a buyer purchasing a significant minority stake with the rights or requirements to buy a majority or the entire business later. These deals can be highly strategic, offering both the buyer and seller unique advantages. This article will delve into the strategic benefits of path to control deals, explore situations where they are particularly advantageous, and examine common structuring options and the risks and pitfalls associated with them.

Seller Considerations for Majority but Not Outright Sales: Retaining a Large Minority Share

By Zachary Cefaratti | 10 July, 2024
In many M&A transactions, sellers face the decision of whether to sell their entire business or retain a significant minority share. Opting for a majority but not outright sale can be a strategic move, allowing sellers to benefit from the continued growth and success of their business while also securing liquidity. This article explores the benefits, risks, and key considerations for sellers in such transactions, and when retaining a minority share might be particularly attractive.

Understanding Adjusted EBITDA: How Financial Advisors Can Identify Appropriate Adjustments and Maximize Value

By Zachary Cefaratti | 5 July, 2024
In the M&A process, one of the most critical financial metrics used to evaluate a company is EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). However, the raw EBITDA figure often does not provide the full picture of a company’s true earning potential. This is where Adjusted EBITDA comes into play.

M&A Valuation Methods: DCF, Multiples, and LBO — Why Multiples Often Prevail

By Zachary Cefaratti | 5 July, 2024
n the complex world of mergers and acquisitions (M&A), arriving at an accurate and fair valuation is crucial for both buyers and sellers. There are several valuation methods used in M&A transactions, including discounted cash flow (DCF), comparable transactions based on EBITDA multiples, Accretion/Dilution analysis and leveraged buyout (LBO) models. Despite the academic rigor of DCF and LBO models, multiples often play a significant role in deal negotiations. Discounted Cash Flow (DCF).

Why Strategic Buyers Often Pay More: A Deep Dive into Accretion and EBITDA Contribution

By Zachary Cefaratti | 2 July, 2024
In mergers and acquisitions (M&A), strategic buyers frequently outbid their financial counterparts. This phenomenon often perplexes business owners, especially those navigating the M&A landscape for the first time. Understanding why strategic buyers are willing to pay more involves delving into concepts like accretion, EBITDA contribution, and synergies.

The Crucial Stage at the End of Round 1 in M&A: Maximizing Value Through Strategic Negotiation

By Zachary Cefaratti | 2 July, 2024
The end of the first round of bidding in an M&A process is a pivotal moment. This stage is where the most significant value can be realized, but it’s often overlooked by sellers and inexperienced advisors. It’s the time of maximum competitive tension, where buyers are most excited about the deal and before the most difficult work has begun. Effectively negotiating at this juncture is critical to maximizing value.