Message Font: Serif | Sans-Serif
 
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev | Next
Author: pauleckler Big funky green star, 20000 posts Top Favorite Fools Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 27501  
Subject: Re: Valuation Question - Growth / Acquisition Date: 10/18/2012 11:57 PM
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Recommendations: 1
Acquisitions and the outcome have very much to do with buying them at the right price.

Most buyers have definite plans for how to pay down debt, and reduce costs, making the combined businesses more profitable--provided the price was right.

Paying down debt usually means selling some of the acquired company's assets. Reducing costs depends largely on the synergies involved. Most companies have overhead in various functions such as purchasing, accounting, legal, IT, etc. Often headcount can be reduced or junior people can be hired to assist sr personnel.

Where excess capacity shows up, sometimes facilities can be closed or sold, and profitable product lines moved.

An acquiring company that does it well can grow by series of acquisitions provided they can continue to find undervalued companies to acquire.

High growth businesses tend to be expensive. That means often you buy a mediocre company and rejuvenate it. Sometimes you find good business opportunities within the mix that were overlooked or underfunded. They may blossom with attention. More often a diamond in the rough must be acquired and polished.
Post New | Post Reply | Reply Later | Create Poll . Report this Post | Recommend it!
Print the post  
UnThreaded | Threaded | Whole Thread (5) | Ignore Thread Prev | Next

Announcements

Pencils of Promise - Back to School Drive
"Pencils of Promise works with communities across the globe to build schools and create programs that provide education opportunities for children."
Managing Your Wealth
Our own TMFHockeypop from Rule Your Retirement fame on the TV show Managing Your Wealth.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and "#1 Media Company to Work For" (BusinessInsider 2011)! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement