What attributes are desired to make the buyer a stronger company? Is the buyer a mature company in need of a growth vehicle? Is the buyer a traditional wholesaler that wants a direct-to-consumer capability? Does the buyer want to add brand equity either through acquiring a brand or through acquisition of a license portfolio or key license? Is the objective to add new distribution or product capability to reduce concentration risk?
WWD: How do you go about identifying targets? Do I need outside advisers?Ī.E.: Identifying targets starts with a clear understanding of the strengths, weaknesses and risks associated with the buyer’s business. Who will we need to sign-off of on the deal, i.e., lenders, stockholders, an investment committee, licensors, government authorities? If so, what will they require for consideration of a proposed transaction? What are the financial resources available to deploy? 3. How do you define the type of company to target? 2.
Some of the factors to be considered are: 1. WWD: What are the factors that should be considered in creating a buy-side strategy?Ī.E.: Successful acquirers know the wisdom of the adage that “if you don’t know where you’re going, any road will get you there.” The key to a successful acquisition program is to invest the time at the outset to develop a clear strategy that is based on your company’s financial capability, careful targeting, and the development of valuation metrics and deal structure that your company is prepared to deploy. We are already seeing an increase in the aggressive acquisitions of distressed or bankrupt companies, an uptick in the IPO market and an increase in the number of Special Purpose Acquisition Companies (SPACs) being created. For private strategics, this may be a time to find accretive add-ons that expand distribution, mitigate risk by product diversification or adding a brand. For public companies, acquisitions may be the means to achieve the growth required to support or enhance stock valuations as it is often faster and cheaper to “buy It, than build It.”įor financial buyers, this is a time to put funds to work that have been sitting on the sidelines through the COVID-19 period. Additionally, interest rates are very low. We strongly believe that acquiring a business early in a recovery cycle is a way to maximize a return on investment. MMG Advisors has recently engaged with numerous companies with significant financial resources seeking advice on whether this is a good time to consider an acquisition. The current bankruptcies and consolidation at retail, tight credit markets, the rapid move to digital, weak balance sheets, disruptions in the supply chain, a lack of generational succession and a potential increase in cap-gains taxes are among some of the reasons the industry is ripe for deals. The answer is yes - this may be a very opportune time to consider an acquisition. So, the question is: can this be both a buyer’s and a seller’s market simultaneously? And now I am being asked whether this is also a good time for acquirers to consider buying a business. WWD: Is this an opportune time to consider acquiring a business?Īllan Ellinger: My partner, Andy Postal recently shared with WWD readers our view that this is a good time to consider selling your business.
In the second of a two-part series on the topic, Allan Ellinger, founder and senior managing partner of MMG Advisors, an investment bank focused on middle-market retail and fashion companies, explains why this is a ideal time to sell and to buy a business - given current market conditions. From an M&A perspective, now is a good time to consider selling a business.įashion and Car Collaborations Throughout the Years
cities such as New York brace for a second-wave of COVID-19, businesses are working hard to maintain cash flow and not get saddled with too much debt.