Investing in Mergers and Acquisitions
Private equity investment refers to purchasing stakes in privately owned companies or taking over publicly listed firms with the intention of privatizing and delisting from stock exchanges. As with other direct investments, this form is typically restricted to large institutions and high net-worth individuals; private equity firms tend to seek businesses valued at at least twice their current cash flow value.
Private equity firms’ ability to generate enormous returns has aroused immense global interest. The remarkable returns can be attributed to various factors, including high-powered incentives for both portfolio managers and operating managers; aggressive use of debt for financing; focused cash generation/margin improvement efforts; and exemption from public company regulations.
Private equity firms excel at managing business portfolios with an ongoing stream of acquisitions and divestitures, while simultaneously identifying hidden gems within larger markets that may otherwise go overlooked, such as small companies offering superior products or services or more agile customer service than their larger rivals.
Private equity firms increase profits through mergers and acquisitions by creating economies of scale to reduce costs through purchasing power, supplier discounts and the leverage of staff resources. Cost savings may then be passed along to employees who benefit from sharing a single corporate infrastructure and processes.
Benefits of taking such an approach may be considerable; however, they can become problematic if it does not ultimately increase revenues. Scaling back operations often leaves employees dealing with falling revenues and mounting debts; in some instances this has put undue strain on workforces such as nurses having to go without vital supplies; apartment residents sharing maintenance crews for maintenance purposes; or fishermen seeing earnings diminished as expenses related to multiple boats add up.
Mergers & Acquisitions
Even in these difficult economic times, investors remain highly interested in merger and acquisition investment opportunities. This demand comes both from private equity groups who have amassed large sums and want to consummate transactions; as well as corporate investors looking for strategic acquisitions to supplement slowing organic growth.
Our Mergers & Acquisition Division is equipped to identify potential buyers interested in purchasing businesses like yours. While some potential buyers may only want 100% ownership, others may offer to form strategic alliances whereby they invest part of their capital with an eye towards eventually purchasing all or more.
Established in Greenville, South Carolina in 1997, Watermark Advisors has successfully coordinated more than 70 mergers and acquisitions transactions for clients, from both sell-side M&A, asset financing arrangements, valuation services, fairness opinions to strategy consulting to both buyers and sellers.
Ms Gordon is a UK qualified attorney with extensive experience in commercial real estate transactions and property management work for developers, family offices, funds and institutions.
KeyBanc Capital Markets honored an M&A deal facilitated by our team as their 2021 Deal of the Year, read more here. Our comprehensive approach to M&A deals is intended to combat their often dismal return-on-investment benefits versus transaction focusing M&A transactions.
Financial analysis is an integral component of making better and more strategic business decisions based on the underlying data governing a business. Financial analysis allows businesses to identify trends, spot opportunities for growth and make informed choices regarding investments, operations and financing activities – benefits which span investors, regulators and management.
Financial analysis involves evaluating a company’s capacity to return at least equal returns on its capital invested while expanding operations profitably while managing cash flow through cash flow management and raising cash through cash flow financing. It typically involves concrete evaluations of financial statements and ratios as well as potential research beyond these basic statements.
Companies conduct financial analysis both internally and externally for investment decision-making, credit rating assessment and lending decisions, mergers and acquisitions, budgeting and planning purposes as well as evaluating new projects or lines of business viability. Analytic techniques available include horizontal/vertical analyses, trend analyses, ratio analyses, cash flow analyses and benchmarking – there are various options to use when performing these assessments.
Quality financial data is integral to accurate analysis. Furthermore, past performance should never be used as an accurate predictor of future performance and any insights regarding company prospects must be carefully interpreted.
As part of an effective financial analysis process, having the appropriate tools such as software is crucial. Such applications speed up report creation while making them more understandable to readers and analysts. Oracle Financial Analytics brings together general ledger and enterprise resource planning (ERP) systems to offer insight into costs versus revenue as well as staffing needs and how they influence customer satisfaction. This platform enables businesses to easily create executive dashboards to provide quick access to key metrics. The software helps ensure all the information relevant for financial reporting is easily understood across their business, which improves financial reporting while decreasing risk. It can also assist compliance with regulatory requirements – for instance, United States Sarbanes-Oxley laws mandate companies disclose all financial data and analysis in an easily accessible format.
Investment banking is a vital aspect of financial services and offers a range of financial services, such as underwriting debt or equity securities and facilitating mergers and acquisitions (M&As), in which one large company acquires another one. Investment banks usually operate under two divisions: buy side (focusing on offering advice to help companies acquire others), while sell side facilitates trading securities (or tradable assets). Investment bank clients include both large corporations and governments.
Investment banking is a constantly-evolving industry with new functions, products and techniques constantly emerging. Furthermore, competition within this field can be fierce; big investment banks typically boast significant market advantages due to their size, global reach and expertise across numerous industries and markets.
Investment banks provide more services than just underwriting and M&A transactions, such as providing liquidity to capital markets by buying and selling shares for their own accounts; trading securities on behalf of clients; providing research – typically the research division reviews multiple publicly listed companies to provide reports with buy, hold, or sell ratings that may be used by outside investors to complete a trade through the trading desk at an investment bank generating additional revenues for itself.
Investment banks typically employ multiple divisions that specialize in specific areas of industry or market, including healthcare, public finance (governments), FIG, industrials, TMT (technology, media and telecommunications), P&E (power and energy), consumer/retail, corporate defense and corporate defense. Each division maintains relationships with various corporations within its field to generate business for itself and the investment bank – this may take the form of M&A advice, leveraged finance arrangements or helping with new issues or IPOs.