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How to Maximize Value Capture for the Entire Deal Lifecycle

Kison Patel
CEO and Founder of DealRoom
Kison Patel
CEO and Founder of DealRoom
“You can't blame integration for everything. It's really the linkage between how you plan integration and how you price the deal.”

Three dials of a deal

This episode of M&A Science is a session from the M&A Science Holiday Summit last year. The interview featured Carlos Cesta, Vice President of Corp Dev at Presidio discussed the best practices to capture value from initial deal prospecting to integration. One of the primary topics discussed is the idea of three dials of a deal, the three dials being: valuation, risk management, and integration.

Carlos remarks that every time you turn one dial, it affects the other 2. If you pay cash upfront, there would be no risk management and you will have to integrate the business fully. If you want to use an earnout, the initial payment will be smaller, but you cannot integrate the business and you need to keep that entity separate. If you want to integrate the business within a certain period of time, you cannot hold 5 year earnouts, which will also affect how much you pay upfront.

Additionally, Kison and Carlos talk about the diligence process and the importance of bringing your synergy thesis upfront in that process and constantly testing if your synergy thesis is realistic.

If it’s constantly coming back as negative and you are not going to get the value you initially thought, you might have to reconsider the price of the purchase or the entire deal itself. 

Show notes

00.00 - Intro

1.25.97 - Background

2.16.47 - The Genesis of Bringing Integration Lead Upfront in the Process

4.25.04 - Three Dials of a Deal

7.17.59 - Real Life Scenario of how those Dials are Connected

10.41.05 - The Start of Integration Planning

11.06.80 - Pricing a Deal with Integration in Mind

12.12.70 - Incorporating Integration Variables into the Deal Valuation

14.41.60 - How To Connect the Diligence Process

17.32.82 - Testing Your Synergies During Diligence

21.00.59 - Aligning the Target CEO and the Integration Lead

25.39.00 - Target CEO and Deal Sponsor’s First Meeting

27.44.34 - Involving the Deal Sponsor is Crucial

31.18.99 - Target CEO and the Integration Lead Needs to Work Together

34.18.20 - Benefits of Bringing Integration Early

38.10.59 - Ensuring Deal Sponsor Accountability

38.51.87 - Craziest Thing in M&A

“You can't blame integration for everything. It's really the linkage between how you plan integration and how you price the deal.”

Three dials of a deal

This episode of M&A Science is a session from the M&A Science Holiday Summit last year. The interview featured Carlos Cesta, Vice President of Corp Dev at Presidio discussed the best practices to capture value from initial deal prospecting to integration. One of the primary topics discussed is the idea of three dials of a deal, the three dials being: valuation, risk management, and integration.

Carlos remarks that every time you turn one dial, it affects the other 2. If you pay cash upfront, there would be no risk management and you will have to integrate the business fully. If you want to use an earnout, the initial payment will be smaller, but you cannot integrate the business and you need to keep that entity separate. If you want to integrate the business within a certain period of time, you cannot hold 5 year earnouts, which will also affect how much you pay upfront.

Additionally, Kison and Carlos talk about the diligence process and the importance of bringing your synergy thesis upfront in that process and constantly testing if your synergy thesis is realistic.

If it’s constantly coming back as negative and you are not going to get the value you initially thought, you might have to reconsider the price of the purchase or the entire deal itself. 

Show notes

00.00 - Intro

1.25.97 - Background

2.16.47 - The Genesis of Bringing Integration Lead Upfront in the Process

4.25.04 - Three Dials of a Deal

7.17.59 - Real Life Scenario of how those Dials are Connected

10.41.05 - The Start of Integration Planning

11.06.80 - Pricing a Deal with Integration in Mind

12.12.70 - Incorporating Integration Variables into the Deal Valuation

14.41.60 - How To Connect the Diligence Process

17.32.82 - Testing Your Synergies During Diligence

21.00.59 - Aligning the Target CEO and the Integration Lead

25.39.00 - Target CEO and Deal Sponsor’s First Meeting

27.44.34 - Involving the Deal Sponsor is Crucial

31.18.99 - Target CEO and the Integration Lead Needs to Work Together

34.18.20 - Benefits of Bringing Integration Early

38.10.59 - Ensuring Deal Sponsor Accountability

38.51.87 - Craziest Thing in M&A

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