Mergers & Acquisitions Made Simple: Step by Step M&A, Company Valuation, Negotiation Skills, Business Plans and Finance Guide for Startup Founders and Entrepreneurs - Softcover
Synopsis
Mergers and Acquisitions can end in disaster or be extremely profitable. For example, the difference between an acquisition that generates profit and one that destroys millions can end up costing you plenty.
I have seen great, sometimes even good transactions. I can even recall a few instances where I thought what my buyers were proposing was just downright atrocious! (Of course, that’s good news if you are on the other side of the table)
This book is your Corporate Finance Centre of Excellence. Any insights that help you navigate the M&A mosaic; the value multiplier for you could still be worth thousands of dollars if not millions.
Who this book is for:
- If you are an Entrepreneur and at some point plan to sell your company, M&A knowledge should be a vital tool in your arsenal. This will allow you to make better decisions in the future should you wish to sell your company
- Startup founders looking to fundraise or buy an upcoming startup to improve their growth prospects or consolidate market share
- Students who want to learn more about Investment Banking or Corporate Finance
- Mergers and acquisitions is a tricky field, even the most seasoned advisers could learn a thing or two
- Senior managers in the finance sector who want to improve their knowledge in corporate finance & M&A
We are going to start off with an introduction to the subject and the procedure, then go through a simple yet entertaining explanation of the whole M&A business, how it works, and what all the jargon means.
Then, for the sake of completeness, I'll give you a quick crash course on valuation.
Now, this may appear to be a lot at first, but I want you to understand how crucial it is to get valuations correct. At the same time, however, it is quite tough. It’s mostly as art.
Then we'll walk you through the process of turning a firm into a viable business.
So we'll go through the first stage of planning, the presale preparation, and then we'll go over how to conduct a sale. We then shift our attention to marketing the company and addressing some of the key concerns.
In this section, which is entitled "Fascinating Deal Analysis," we'll discuss the distinctions between deal and company sales. We'll also go over how to look at a sale in negotiation if you're doing a buyout, as well as some of the things that are particularly essential for financial investors and trade buyers.
I'll then go over some of the difficulties in term sheets. I'd also like to give you a quick heads up on negotiations.
This part, in particular, may develop further. I could write a book on negotiation. As a result, covering this subject in just four chapters is quite difficult. However, I'm hoping that you'll obtain an idea of how vital negotiation is as a skill.
Then we finish the book and depart on our own.
I'm ecstatic to bring you ‘Mergers and Acquisitions Made Simple’. Hope you find this book a very exciting read.
Join me today, and discover what Corporate Finance, M&A, and Selling Companies is all about!
"synopsis" may belong to another edition of this title.
About the Author
Umran Nayani, MBA, is a #1 Best-Selling Author of 14 titles focussing on Entrepreneurship and Finance.
While having an apparent flair for making money, he is also adept at demonstrating how to do so. His over 130,000 students from 185 countries concur.
After earning a Master of Business Administration from the University of Wales in London, UK, Umran Nayani worked as a District Sales Manager for Scottish & Southern Energy PLC.
Umran worked with some of the world's most significant corporations, including AMD, Intel, Coca-Cola, and some of the world's largest charities, such as the American Red Cross.
Post his employment at Zycus Inc., Umran founded his first crowdsourcing startup in 2013 and grew it to eight-figure sales with no outside funding in less than three years.
Since founding ONECALL Business Solutions in March 2019, Umran Nayani has prioritized revenue growth by creating mobile and web applications for early-stage Startups.
From the Back Cover
"Sometimes your best investments are the ones you don't make." - Donald Trump
Negotiating successful commercial deals is the key to transforming a typical firm into a global powerhouse.
One factor that sets apart the great dealmakers of our day, such as Donald Trump, Warren Buffett, and Mark Cuban, is their instinctive ability to recognize and secure profitable deals.
Insights that help you navigate the M&A mosaic; the value multiplier for you could still be worth thousands of dollars if not millions.
Mergers & Acquisitions Made Simple is a SHORTCUT
- If you are an Entrepreneur and at some point plan to sell your company, M&A knowledge should be a vital tool in your arsenal. This will allow you to make better decisions in the future should you wish to sell your company
- Startup founders looking to fundraise or buy an upcoming startup to improve their growth prospects or consolidate market share
- Students who want to learn more about Investment Banking or Corporate Finance
- Mergers and acquisitions is a tricky field, even the most seasoned advisers could learn a thing or two
- Senior managers in the finance sector who want to improve their knowledge in corporate finance & M&A
What becomes clear as you examine any complex market is that becoming exceptional at what you do means becoming extraordinarily efficient at managing exceptions.
From the Inside Flap
Chapter 15: Valuation of a Firm for Sale
Welcome back to Valuation of a Firm for Sale, where I'll discuss valuation in this Chapter.
Now, because the owner of the company would desire a very high value, and any buyer will attempt to place a low worth on it, valuation is a highly contentious issue.
If you're an adviser, you're caught in the middle because you'll be attempting to establish a value that is objective and help the two parties come together.
I'm going to keep it simple. I'm not going to get into option pricing models. I'll just stick to three easy techniques.
They are also comparable firm comparisons, comp. M&A transactions, and accrual-based cash flow calculations.
Let's start with the first one, which is listed company comparable metrics.
We've already gone through the following steps. Now we're doing a little different approach of looking at similar firms and seeing how they're valued. We'll go over what happens next in the investing process below.
Depending on the company's line of work. You must decide which is most essential. However, you're usually considering profit and loss account multiples and earnings per share multiples.
What you should do is establish a matrix of these so that you can see the averages that result.
This also aids in the smoothing of any market anomalies. Of course, when you look at your Comparables, you must be aware that if there is a genuine outlier, you must investigate and find out why the market values a company so highly or so badly.
You may then use the matrix and the averages of these multiples to valuate a firm, which will show you what sort of range each multiplier has for that valuation.
So the second approach to examine valuation is to look at comparable mergers and acquisitions deals. Deal databases are available to your advisors, but go and look at similar firms that have been sold and attempt to figure out what revenue multiples, earnings multiples, assets multiples, and cash flow multiples they were acquired at.
Examine those firms and apply what you've learned to your own company. What I discovered in the past is that you won't have full financial information on all of these transactions.
If you can get a multiple of profit or revenue, and if you can acquire these distinct data points, and if you have enough of them, you may begin to construct a meaningful range of multiples that you may apply back to the company's mission of attempting to value.
Now, discounted cash flow is a more sophisticated, but also a more objective technique than DCF, because here you build a model of the firm and it must be an integrated profit and loss, cash flow, and balance sheet model so that any changes in one reflect throughout the whole model on your balance sheet must always balance.
But, again, what you're doing is you're taking the company's cash flow for the next five or ten years and I recommend a period of ten years. Then you discount that value to today's dollars to get a present-day value, which gives you a company valuation.
There are quite a few red flags in this approach. The first is your forecasts' assumptions.
Second is the discount rate you use, and third is the terminal value you choose.
The valuation of a company in a DCF model is highly reliant on the assumptions made going into it. As a result, it is still highly subjective.
Another thing I would say is that, when you're comparing market transactions and historic M&A deals, you need to be aware of the current market conditions as well as those that prevailed in the past because, as I'm sure you're aware, the market goes up and down like a yo-yo.
I recall hearing one entrepreneur tell me in the early 2000s that his firm had to be worth 40 times revenues because some person had valued it at that level three years ago, before the dotcom bubble burst.
Of course, the industry had changed significantly, and it was becoming increasingly difficult for him to accept this, because I believe he really wished he'd sold the firm three years ago at those obscenely high levels.
That's all there is to it when it comes to valuation; we're trying to assist you in understanding how you and your advisors will arrive at a valuation range for the business that will be sold.
--This text refers to the Paperback edition.
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