Back to Basics – Beware of M&A rules of thumb
Abstract: Lenders often finance mergers and acquisitions, and sometimes after the buyer and seller have agreed on the selling price and terms. But it’s important to always inquire about the due diligence that a buyer has performed. Too often, the parties are eager to close, so they sidestep the formal valuation process. Instead, they may rely on industry rules of thumb to negotiate price. This article describes how such rules can be oversimplified, ambiguous or outdated.