Among the fastest ways for a company to grow entity value is through accretive acquisitions. With a well-executed acquisition strategy, companies can realize significant value in the first year, which often accelerates in the years that follow.
Business owners thinking about transitioning out of their companies must consider factors that help identify and target buyers of choice. Certainly, active acquirers that consistently demonstrate an ability to pay handsome prices, close deals rapidly and continuously create shareholder value via acquisitions is a winning combination.
Lennar Corporation recently announced the acquisition of CalAtlantic Group. Together, the companies form the largest home builder in the U.S.
Bloomberg reports private equity firms currently have more than $950 billion of capital waiting to be invested in the marketplace.
In this favorable market, how do sellers contemplating an exit from their business decide whether to pursue an M&A sell-side transaction or the formation of an Employee Stock Ownership Plan (ESOP)? They don’t. Instead, they run a dual track process which incorporates both processes. This provides the owners knowledge of both possible outcomes simultaneously. Now the owner can make the best choice based on actual offers and company specific options.
Successful transactions require important decisions about rebranding— if, when and how to transition an acquired brand. Unfortunately, these brand strategy considerations are often overlooked or only considered after the acquisition. This is partly because there is a lack of relevant historical data for analysis.
Private equity groups traditionally hold their investment companies for five years. However, several factors have increased the average holding period from 4.5 years to 5.8 years from 2006-2016. This trend is expected to continue in the medium term.