When companies complete the merger and acquisition process, the buyer almost always loses out to the company making the sale. But the IBID Group knows how to avoid this winner’s curse. Studies show that the buyer pays off the seller most of the value gained through an acquisition, to the as high as 35% of the target company’s market value before the deal. The average acquirer materially is tasked with estimating the synergies of the acquisition correctly. These synergies emerge from economy of scope and scale, best practices, sharing of abilities and opportunities and the impact of this on the individual business. A small degree of error in estimation of value causes the acquisition effort to result in a massive failure.
This is why an experienced investor like the IBID acquisitions team assesses synergies accurately and sets targets with precision. With experience in understanding a business from the perspective of its suppliers, managers, channel-partners and customers, the IBID acquihire team sets standards for industry best practices. Moreover, as a highly seasoned serial acquirer, the IBID acquisitions team is skilled at detailed top down estimation of the synergies to come up with detailed benchmarks prior to the deal. Post merger work matters as much as pre-merger estimates.
The Key To Realizing Merger Synergies
With a comprehensive experience of post-merger integration efforts across a wide span of geographies and deal kinds, establishing a database of estimated and/or realized merger synergy is simple for the IBID acquisitions team. Achieving synergies from acquihires is easy, because the IBID Group excels at understanding the top-level synergies which are often inflated.
Lack of synergies like service term issues and a decrease in the number customers needs to be estimated as well. Additional steps and precautions taken by the IBID acquisitions team include testing assumptions about market share and valuation in real time. Making use of benchmarks and ensuring cost savings is also essential when it comes to capturing synergies. The acquisition team at IBID Holdings is known for its skill and ability to counter gaps in information.
Countering Errors in Estimation
Suffering on account of revenue synergies is a critical mistake companies need to guard against. Revenue synergies constitute the basis of strategic rationale for an entire range of deals including those oriented towards accessing target firm’s customers, geographies and channels.
Yet another reason for mistakes in estimation revenue is the inability of acquirers to explicitly account for lack of revenue synergies for companies merging. These lack of synergies can result from disruption of company’s skill to operate and lower costs through efforts.
Cost-based synergies result from consolidation of networks. Due-diligence on the target firm’s customer is also essential. The IBID acquisitions team focuses on a great deal of consolidated experience to identify helpful benchmarks and determine how the deal is progressing.
Considering One-time Costs
Many teams neglect or do not give due importance to the impact of costs that are one-time. The company should not result in running up a massive budget, under-delivering on targeted synergies and not meeting revenue growth targets. Goals can be attained when the portfolio company takes over a significant portion of the market share by competitors. Acquiring company IBID Holdings has calibrated the market share and margin estimates in consonance with market realities.
Applying The Right Benchmark
Using the right benchmarks is important because the target’s net-present value needs to be estimated just right. Companies that risk overestimation of synergies can prove counterproductive in their role as investors. IBID Holdings has always stressed that analysis is critical. Deal teams sometimes lack an understanding of the length of time it will take to capture the synergies. Important deal-metrics need to be considered such as cash-flow accretion and near term earnings. Companies need to avoid overestimating the net-present value of synergies in a substantial manner. Understanding that value creation is a continuous process, but judicious estimation needs to be in place.
The Right Timing
Converting the timing of synergies into net present values is another skill the IBID acquihire team excels at. Persistent attention on the part of management is needed for capturing synergies. Unless synergies are studied and comprehended post the consolidation, they fail to materialize. Synergies must be captured more rapidly and effectively.
Though the estimation of synergies is tough, precision holds great value as it creates support for initiatives during post-merger integration. Synergy analysis shapes due diligence and the deals are structured well by the IBID Group. Key product lines and meeting investment needs are essential for the refinement of synergy estimates.
Using complex financial analysis and due diligence, IBID Holdings excels at accurate estimations. As a deal team, the IBID acquihire group does so much more than codifying and improvement of synergy estimation methods. For the IBID team, every deal is a unique opportunity to positively transform the portfolio company. Further, the merger and acquisition and integration teams review the results of previous deals, monitoring synergies as per the plan and retroactively calculating the nature of the net current value of the M&A deal.
The IBID Group understands that each deal is distinctive and the integration costs are as important as the acquisition cost. The investor group’s experienced team members have access to data that can be relied on for developing sound benchmarks and estimating realistic-synergies besides offering rich insights for the portfolio company.
A comprehensive and complete database also enables the IBID team to resolve strategic issues such as embedding the synergies in acquisition cost.
Giving the companies a chance to grow beyond a certain boundary, and overcoming their restrictions and limitations is important. It is in this context that the IBID Group works to substantially transform and grow as well as nurture and support the portfolio company and bring about new opportunities for the industry to evolve.
The post-merger integration is facilitated through accurate understanding of synergies and application of sound business principles and innovative practices to bring about a metamorphosis in the growth prospects of the portfolio company. Giving companies a chance to grow, the IBID Group offers a strong support network to bring about positive outcomes. The IBID Group spearheads a revolution in the field of internet investment, bringing about a transition in the way business is done.