Mergers & Acquisitions

John Wagner - working capital peg

Structure earnouts to the seller’s advantage

In most deals, the seller believes their company is worth more than the buyer wants to pay.
John Wagner - working capital peg

OPEX reductions may wipe out pandemic losses

The reduction of sales has seen a coincidental reduction in operating expenses (OPEX), as reduced operations demand less cash.
John Wagner - working capital peg

Take an acquirer’s view of your company

It's human nature to wonder how you stack up against competitors. Are you as profitable? How does your profit as a percent of sales revenues affect your company’s value?
John Wagner - working capital peg

When is a deal priced?

Most companies seek acquisition when they are on an upward trend, putting up numbers each month that are higher than the previous month.
John Wagner - working capital peg

Don’t let the COVID-19 pandemic devalue your LBM business upon sale

For LBM companies that are now in the process of seeking acquisition—indeed for almost every company—the COVID-19 pandemic has suppressed sales revenues and resulting EBITDA.
John Wagner - working capital peg

Beware of financial engineering

For successful, growing companies, there is simply no need to allow an acquirer to pay you with your own money.
John Wagner - working capital peg

Don’t let the COVID-19 pandemic devalue your LBM business upon sale

Here’s how to credit COVID-19 losses to earnings when selling your company.
John Wagner - working capital peg

Revenue is not profit

In each and every deal we do, potential acquirers will want to know the revenues, sure, because that will show the orders of magnitude of the EBITDA.
John Wagner - working capital peg

Do you get a check for inventory at closing?

I can't tell you how many company sellers wrongly calculate the dollar value of inventory when they are tallying up their company’s worth.
John Wagner - working capital peg

Losing control during an earnout period

When there is a disagreement between an acquirer and a seller about the value of a company, yet determination to get the deal done, an earnout is often put in place.

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