You’ve closed the acquisition deal. Now what? Many companies sign on the dotted line and immediately begin overhauling systems, operations, HR, customer relationship functions, etc.. But, if you want to secure a high return on your investment in this new company, you would likely benefit from a more patient, strategic approach when it comes to the early days of post-acquisition integration.
Change is hard. If you’ve been through a merger or acquisition, you know how many challenges can arise when you’re going through a transition. And, while it’s imperative that you conduct comprehensive due diligence before you invest in a new company, today’s competitive landscape often requires the completion of due diligence faster than ever before.
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These days there is much talk about the low growth rates in the US and other developed economies. Measures proposed to enhance GDP growth include fiscal policy, border adjusted tax, tax code simplification, corporate rate reduction, repatriation, regulatory relief, trade, workforce training and enhanced capital access.
A financial model should analyze the complex relationships between costs, volumes and revenues that lead a company to be profitable. It should provide an early warning that profitability is deteriorating so that management can take action. What are some early warning indicators that a company is becoming less profitable as its grows its top line—and might even risk growing itself out of business?
Early stage companies naturally gravitate to budgeting as a way to control their spending and measure performance against their plan. They are less likely to see the need for an economic or financial model that is forward-looking in predicting how the company’s will respond to changes in circumstances and assumptions. We asked our partners to explain how a financial or economic model of the business differs from a budget or forecast.
Entrepreneurs who start to achieve success can expect to be approached by investment bankers who want to create a relationship with them, anticipating the possibility of doing a transaction down the road. Question: What are the pros and cons for a company early on to establish a relationship with an investment banker, even if a transaction seems to be years in the future?