Are you considering getting into the acquisition game? This article is a must-read. In it, you’ll find a breakdown of the math you need to do to ensure the business is valued appropriately – and to determine the costs of expansion.
Looking to buy a new business?
Everyone has their own reasons for buying businesses. Some want more independence in the way they work, others want to make money.
Strategic buyers, however, look to acquire more businesses for their economies of sale, as well as the fact that acquiring a new business and absorbing it into their own allows them to grow faster while gaining access to more markets.
How does all this work?
It comes down to the maths behind acquisitions, and it’s known as the variation multiple which is the basis for this article. The fundamental idea is that growing a business via acquisition allows strategic buyers to increase the value of their own business in powerful (and fairly rapid) ways.