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Practitioner's Complete Guide to M&As: An All-Inclusive Reference, with Website by David T. Emott

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Topic 4

Deal Criteria

Topic 4 discusses in depth the need for well-thought-out criteria to guide the acquisition search and candidate evaluation. Acquisition criteria capture the essence of what the acquirer is after and provide a basis for measuring both how close a target is to the ideal fit and helps identify the target's strengths and weaknesses. Criteria development allows the chief executive officer (CEO) and board of directors to emphasize what matters most to them. It must be emphasized during acquisition search and evaluation. This topic illustrates acquisition criteria and criteria rating.

DEAL CRITERIA DEVELOPMENT

  • Having clear acquisition criteria helps narrow your search, develop the search mandate, and eventually make choices between candidates. Illustration 4.1 provides an example of acquisition criteria.1 Readers should consider all and select those most relevant to their merger and acquisition goals.

ILLUSTRATION 4.1 POSSIBLE ACQUISITION CRITERIA

Strategy Output Criteria for Target Identification (see Topic 1)

  • Industry/business/product/service area sought to close identified gaps

  • Technology/know-how/enabling competency sought to close identified gaps

  • Geographic dispersion sought to close identified gaps

Qualitative Criteria for Target Consideration and Evaluation

Market Attractiveness Attributes of Target Served Market
Value Chain Clearly defined chain of value-added steps from producer to customer to end consumer
Growth Forces Positive; intrinsic ...

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