Why do stock market investors sell when prices collapse and buy when prices soar? Why do real estate owners display the same irrational behavior? The math is hardly difficult. It’s better to buy when valuations are low and sell when they are high. Yet human nature seems to require that we run with the market […]

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Officially, there’s been a drop of some 27% in M&A deals in the past year. In reality, this number is skewed by the large deals. In the markets where Capstone plays — mostly deals under $1 billion — there is a drop in activity but not to this catastrophic degree. There are still plenty of […]

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Here’s a recent exchange between the two principals in an acquisition we are advising on. Seller to buyer, “So what’s your exit strategy?”  An odd moment in the circumstances. Usually, the last thing M&A buyers have on their minds is offloading the newly combined entity. Seems a bit like talking about divorce at a wedding. […]

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In my last post I commented on the opportunity that has risen in the mid-market with the concentration of investment banking focus on major deals. There’s a chance for third-party advisors like Capstone to do more than fill the vacuum recent events have created. However, it’s important to understand what the gap really is — […]

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The short answer is: they got bought up by massive banks. The rapid consolidation of the investment banking industry is one of the most dramatic developments amidst the recent financial turmoil. The independence of the old IB firms has vanished, consumed by monolithic multi-function institutions like Bank of America. The real question is, what does […]

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If you’re thinking of buying another company, the scale of your projected acquisition is an important question you need to settle early on. Your objective is growth, and it would be easy to deduce from this that the bigger your purchase, the better. Not so. You’ve heard the familiar question, “How do you eat an […]

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Companies buy companies to grow, but that doesn’t tell the whole story. In reality, there can be multiple reasons for an acquisition. Here’s a snapshot of some of the most common: Increase Top Line Revenue – The ultimate objective in any business is higher earnings, and to reach that goal you will eventually have to […]

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I was struck by Matthew Karnitschnig’s excellent article in yesterday’s Wall Street Journal. His opening line was perhaps an overstatement — “M&A is almost dead”. But the gist of his piece is right on the money. Mr Karnitschnig’s theme is the one I have been pounding in this blog for the past few weeks. In the world of […]

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If  you are contemplating growth through acquisition, let me offer one rather obvious piece of advice. Know why you are buying. At Capstone, we impose a strict and simple rule. Have ONE reason, and one reason only. A single reason, a single strategy, a single company: that is the discipline of success. Trying to fulfill multiple […]

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My company Capstone is in the business of helping clients with external growth, and that usually means buying another company. But not always. It’s easy to miss a rich field of alternative opportunities if you just latch on to acquisition. Let me just focus on one of these: minority interest ownership. This surprisingly neglected tactic […]

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Common sense suggests that growth is simply about getting bigger — having more customers, more markets, more products and more revenues. In reality, a successful growth strategy should help you become increasingly focused and effective. Of course you want to increase your profits, but higher earnings don’t automatically flow from supersizing your company.  In fact, […]

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  In my last post I was talking about perhaps the most fundamental strategic question: What business are you in?  This question actually goes beyond how you define your product or service. It extends to the kind of customers you are seeking. Here’s something I often ask clients who are looking to grow by acquisition: […]

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  One of the most potent tools we use at Capstone to help our clients prepare for an acquisition is a set of seven strategic questions. They are so simple, so obvious, that you’d think them unnecessary to ask. Yet they are often skipped over in the rush to grow. Let me share with you […]

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  The statistics are frightening. By most reckonings, 77% of company acquisitions fail. That failure rate has nothing to do with luck. It is the telltale statistic of widespread ignorance. Now when I say “ignorance” I don’t mean lack of expertise. That’s the paradox.    I often encounter clients who tell me, “Yes, we have […]

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  If you want to read a decent book on M&A, be prepared to spend $70 or $80, and set aside several days to plough through a heavy-duty tome for business students. There are exceptions, but for the average business reader there’s remarkably little to guide you through our world of deals.   So I’m […]

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“Our strategic plan calls for us to double our size…” I hear it often. As a plan, it’s usually very successful in doubling the stress of frustrated executives. By massive efforts to improve products and smarten the marketing, they can get revenues from $100 million to $125 million. But $200 million? They pay lip service to […]

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The year is closing out and it’s budget season again, a time to look ahead to 2009. Despite the chilly economic climate, there are plenty of companies doing pretty nicely thank you. At Capstone we have a number of successful clients who have their current operations nailed down. Products are selling, customers are loyal and […]

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Dark times on Wall Street and gloom in the real economy… but for companies seeking external growth there are gleams of hope from distant quarters. Funds continue to pour into the US from abroad. I just spent time with an economic development group hosting a contingent of matchmakers from China — entrepreneurial types looking for […]

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I was asked the other day what can be learned from the possible merger of GM and Chrysler. Specifically, what might this union of giants teach the M&A market lower down the food chain? As I’ve said elsewhere, this is a time when corporate mergers can appeal to those struggling with a hostile economic climate. […]

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When it comes to funding acquisitions, banks are still holding tight to their money — unless you count the special case of banks buying other banks, which is causing quite a stir in the wake of the government bailout. The fact is, this is still a tough time for M&A, especially in what I have […]

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