Nothing by D Trump please

Working on projects acquiring entities valued £30-50m and assets £2 to 15

Usually with complexity in the ownership

Based on these numbers, the beano

Just wing it – you’ll be alright.

Those are pretty small deals, I doubt there will be too many specialist texts. Probably just as well reading some general M&A / Equity Valuation books and applying general principals

What specifically do you want to know?

At those values, you’d be better spending money on reasonable corporate finance accountants and lawyers.

The only thing you need to know is that any information you can publically get your hands on relating to a company or the acquisition of a company based on public data is worthless.

My best friend is a hugely successful PE investor in her own firm (she just closed a deal that transformed a £25m acquisition into a £200m sale in four years). I have spoken to her a great length about her investment straegy and there are two things she always comes back to:

1. Can I work with the management team to build this business and make it grow.
2. What are the ACTUAL numbers; what is really going on in this business. The meaningless snapshot in time public accounts are worthless in making a decision to buy; it is the actual day to day management accounting numbers that she uses to do all the investment analysis.

Based on these numbers, the beano

Thank you for your input

Those are pretty small deals

Yes, that is why I am making the tea and carrying the bags

Probably just as well reading some general M&A / Equity Valuation books and applying general principals

After recommendations rather than just choosing at random

At those values, you’d be better spending money on reasonable corporate finance accountants and lawyers

They are, the idea is to understand the jargon and principles as well as some of the technical issues with unravelling certain types of finance/ corporate structure

I can only assume your numbers are wrong. If not walk away now. That is valuable input.

I can only assume your numbers are wrong. If not walk away now. That is valuable input.

You can get a lot for £15 outside the metropolis, even more for £15m

I am surprised you are spending time on this seeing as you wouldn’t get out of bed for these micro projects

Big n Daft (funny but I had a very good friend at school who had just this nickname)

I can recommend ‘Principles of Corporate Finance’ by Brealy & Myers. This was my ‘go to’ text for corporate finance on my MBA programme back in 2002 (Manchester Business School so it’s reasonable to asusme some credibility for the book recommendation).

This book will give you all the basics of company valuation as well as much more (like option pricing theory – now massively debunked by the 2008 financial crisis so look for a modern version of the book).

It’s pretty interesting stuff when you get into it. There will be a lot of material you won’t need; the sections on company valuations will be the most obviously relevant.

Part of my MBA programme included a four week M&A project where we investigated target comapnies and modelled a large acquisition on behalf of a real client – Northern Foods were the sponsor that year. Companies would use the student body’s input as a way of scouting the market for free and in return would provide real data input for us to use.

Of the whole 18 month Full Time programme, the M&A was the most rewarding part and the area I learnt the most about the inner working of business on. It brings together everything, but in particular the importance of combining the understanding of finance with the understanding of people – something that a lot of M&As got wrong in the 80s and 90s but which latterly they got right.

There was some fascinating research done by Towers Perrin about ten years ago that looked at the factors behind this shift – showing that M&A activity was being net productive of late (where previously it had eroded shareholder value) precisely because people were paying attention to the people aspects.

In a small acquisition, these are even more important than anything else. The business financials may look great, but ultimately they look great (or not as the case may be) because of the people running that business.

My friend for example, bought the company referenced above because she could precisely see that there was scope to expand significantly but also fundamental mistakes being made by the management team. Her decision to acquire was based on knowing she would likely have to fire and replace two thirds of the team, which is what happened.

SO in addition to Brealey & Myers, I would also recommend reading up around organisational design. Hope this helps.

On the contrary I AM involved.Hence my comment.

But just google basic guide to M&A and there are plenty of texts of varying detail.

On the contrary I AM involved

Hence my comment.

Thank you for your valuable insight

But just google basic guide to M&A and there are plenty of texts of varying detail.

But which are well written?

It’s a pleasure. Re-read yourOP, and then you can thank me again.

Don’t mean to be arsey – sorry – but you OP suggest that you should not be involved, Try Ciaran Walsh Key Management Ratios which covers M&A bit will give you some better basics which will explain my comments

It’s a pleasure. Re-read yourOP, and then you can thank me again.

Don’t mean to be arsey – sorry – but you OP suggest that you should not be involved, Try Ciaran Walsh Key Management Ratios which covers M&A bit will give you some better basics which will explain my comments

Thank you for your valuable input. I now know my place

Can you recommend a good text on how to punctuate on social media?

No sorry.

Geetee makes many good points not least the one about public accounts being close to useless (esp for small companies), you need real data like bank accounts, cash flow, order book then an understanding of what the company really does and why people hire/buy from them.

As an aside nothing wrong with option pricing theory just people (willfully) used the wrong volatility and especially correlation assumptions

Buying SME entities like you are discussing is fraught with danger, businesses can be highly dependent on one or two key people or one key client. Text book valuation won’t help you there.

OP one final note if ownershio structures are complex that can (will) drastically impact valuations as it you don’t really own something and/or have the ability to control the company it’s not worth much at all

OP one final note if ownershio structures are complex that can (will) drastically impact valuations as it you don’t really own something and/or have the ability to control the company it’s not worth much at all

It is more about unstitching them, getting control is vital or it is worthless, the specialist advice will cover this, as I said I am making the tea and carrying bags. Or I was until my lack of diligence in punctuation on social media was highlighted. I now know my place and will leave such highbrow stuff to the metropolitan elite

No sorry.

Thank you again for your input

pleasure” you could read Walsh Ch 18

It’s available outside the metropolis.

pleasure” you could read Walsh Ch 18

I am glad you feel rewarded, I am not sure why I need to read the text after taking your earlier advice on stepping away from tea making and bag carrying due to my poor social media communication skills

Again thank you for your input and time on the matter

well, the figures in you OP suggest that this is an area you should avoid. Read Walsh, you will see why.

anyway – over and out – good luck either way. I hope I can find buyers who are willing to pay the same valuations!!