ILMA Compoundings October 2017 - 27

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is to make sure you're working with
a good law firm that has done deals
before, knows their way around purchase agreements and understands the
market for all the terms and conditions that go along with these things.
It can get very complex. Having a
legal partner - whether in-house or
external - is invaluable."
Industry experience is less important
than transactional experience in these
cases, he believes.
"If you've not been acquisitive, you
can't overestimate the value of good legal counsel when you're making these
deals. There are lots of tiny details that
could be very important to the person
whose company you're buying." Overlook those details and "the deal could
fall apart, cause hard feelings or lead to
overpaying for things you shouldn't."
"Every company will have their own
business model," he added. "When
you're looking at an opportunity, you
want to understand that company's
model but recast it in the way you
look at your numbers, so you truly
understand what their margins are

"Once the details are squared
away, any planned integration
should occur as quickly and
with as much communication
as possible."
and so on. You want to judge apples
against apples."
It is also important to remember
that valuation changes over time. "If a
business is on a high-growth trajectory
or has significant synergy opportunities, you're going to be on the higher
end of the valuation range," Berquist
said. "If the business has been flat or
struggling, you may end up on the
other end of that range."
Thorough valuations take time.
How much time will vary from deal
to deal. In some situations, everything
can be finalized in a few months. Most
will take much longer, with some
extending into years. But even in the

face of outside pressures, these deals
must not be rushed.
"Companies that want to start acquiring should be very careful," warned
Sergio Coleoni Jr., head of global
marketing for LANXESS. "Spend the
necessary time evaluating the potential
acquisition. I believe more than 70
percent of acquisitions fail in the end.
Companies need to not just jump in
because they want something to show
to the market or only because it can be
interesting extra sales revenue."
Once the details are squared away,
any planned integration should occur
as quickly and with as much communication as possible. "Do it as soon

27
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ILMA Compoundings October 2017

Table of Contents for the Digital Edition of ILMA Compoundings October 2017
