Why working capital matters in M&A deals

Working capital adjustments catch many business owners off guard during a sale. Too often, sellers focus only on purchase price and overlook how much capital is expected to stay in the business at closing. It’s one of the most common areas where deals get tense, and one of the easiest to prepare for with the right guidance. This is why I always encourage owners to educate themselves early. A little preparation can protect a lot of value.

Day 203/365 Corporate Finance - Control Premium in Valuation: Why Acquirers Pay More Ever wondered why companies pay 30–50% above market price during acquisitions? That extra amount is called the Control Premium — and it can make or break an M&A deal. ⸻ 🔍 What is Control Premium? It’s the additional price paid by an acquirer to gain controlling ownership of a company — usually to influence strategy, management, or capital allocation decisions. ⸻ 💡 Why It Exists 1️⃣ Strategic Synergies — Ability to align the target with acquirer’s long-term goals. 2️⃣ Operational Improvements — Better cost control, efficiency, and management oversight. 3️⃣ Access to Hidden Value — Unlock underutilized assets or growth potential. 4️⃣ Tax & Financing Benefits — Leverage financial synergies or restructure debt. ⸻ ⚖️ How It’s Measured • Typically expressed as a percentage over market capitalization before acquisition announcement. • Example: If Company A trades at ₹100 and gets acquired for ₹130 → Control Premium = 30%. ⸻ 🚨 Key Caution A high control premium isn’t always good. Overpaying leads to “Winner’s Curse” — when the premium destroys rather than creates value. ⸻ #ControlPremium #Valuation #CorporateFinance #MergersAndAcquisitions #FinanceLearning #InvestmentInsights ⸻

Day 191/365 Corporate Finance - Control Premium in Valuation When acquiring a company, buyers often pay more than the market price per share. This extra amount is called the Control Premium. 💡 What it means? The premium represents the value of having control over a company’s strategic, financial, and operational decisions. 🔑 Why Buyers Pay Control Premiums? • 🏗️ Strategic Decisions – Ability to restructure, divest, or expand. • 💰 Cash Flow Usage – Control over dividends, debt, or reinvestments. • 📊 Synergies – Realizing cost savings or revenue growth from integration. • 🏦 Management Influence – Replace underperforming teams or align incentives. 📌 Typical Range: • Usually 20%–40% above market price. • Varies based on industry, size, governance, and takeover defenses. 🔍 Why it matters? • Crucial in M&A negotiations. • Impacts fairness opinions in deals. • Balances against Minority Discounts in valuation. 💬 In short: Control = Power, and in finance, power comes at a premium. ——— #Valuation #CorporateFinance #MergersAndAcquisitions #ControlPremium #FinanceLearning

Considering selling a business? One of the key factors influencing a successful exit is having clean financials. Potential buyers, whether private equity firms, competitors, or key employees, will want to see a solid track record of at least 2-3 years. Without clean financials, the purchase price is almost guaranteed to be negotiated down due to the increased risk for the buyer. Ensuring financial transparency and accuracy is crucial for maximizing business value and attracting the right buyers. #businessvaluation #financialplanning #businessexit #mergersandacquisitions #financialstrategy

Think excess cash is always a good problem? Think again. Businesses often celebrate bulging bank accounts. It feels safe, secure. But in the real world, too much idle cash is less a comfort, more a ticking clock of missed opportunity, eroding value silently. Many overlook the hidden costs and strategic inertia that comes with simply letting capital sit. It's not just about being liquid; it's about being efficient with every dollar. * Invest in growth: Fund R&D, Capex, or strategic acquisitions. * Optimize capital: Pay down high-interest debt or distribute dividends. * Enhance operations: Upgrade tech, streamline processes for future savings. Cash flow is vital, but strategic cash deployment is the true driver of long-term value. What's the smartest way you've seen a company deploy its excess cash? #CashFlow #FinancialManagement #CorporateFinance #Treasury #AccountingInsights #BusinessStrategy #CFO #CPA #CA #WorkingCapital #FinanceTips #ValueCreation #StrategicFinance #IdleCash #CapitalAllocation

📝 Determining an Exit Price for Equity in a New Business When a business has just started 🚀, it may not be possible to determine an exact exit price for equity upfront. However, the parties involved can agree in advance on a valuation mechanism 📊 that will be applied at the time of exit. For example, the exit price may be calculated as: ✅ A multiple (e.g., 10x) of the average EBITDA of the last 2 years 📈 ➖ Less the value of any outstanding long-term debts 💳 This approach ensures clarity 🤝, fairness ⚖️, and transparency 🔍, while giving all stakeholders a pre-agreed formula to determine value in the future.

Why Now is the Time to Get a Business Valuation We’re seeing some clear signals in the market right now: Strategic acquirers and investment firms are staffing up in-house acquisitions teams. That means they’re preparing to get deals done. Borrowing rates are starting to ease. When capital gets cheaper, buyers get more active. Valuations are shifting north. The same business that looked “steady” last year may be worth more today simply because of where we are in the cycle. For business owners, the implication is simple: ✅ The companies that understand what they’re worth today will be the ones best positioned to capitalize when offers start coming in. A comprehensive valuation doesn’t just put a number on your business—it gives you the confidence to negotiate, prepare, and make informed decisions in a shifting market. If you’ve been waiting for the right moment, this may be it. 📩 DM me if you’d like to discuss how a valuation could help you take advantage of today’s market conditions.

Why Now is the Time to Get a Business Valuation We’re seeing some clear signals in the market right now: Strategic acquirers and investment firms are staffing up in-house acquisitions teams. That means they’re preparing to get deals done. Borrowing rates are starting to ease. When capital gets cheaper, buyers get more active. Valuations are shifting north. The same business that looked “steady” last year may be worth more today simply because of where we are in the cycle. For business owners, the implication is simple: ✅ The companies that understand what they’re worth today will be the ones best positioned to capitalize when offers start coming in. A comprehensive valuation doesn’t just put a number on your business—it gives you the confidence to negotiate, prepare, and make informed decisions in a shifting market. If you’ve been waiting for the right moment, this may be it. 📩 DM me if you’d like to discuss how a valuation could help you take advantage of today’s market conditions.

A business valuation is a critical component of securing a company’s future. Whether it’s done as part of a business sale, merger agreement, litigation proceedings, investment negotiation, succession planning, estate planning, or in compliance with financial regulations, a company valuation gives all included parties reliable information about a business’s financial worth and risk level to aid in strategic decision-making. One person is instrumental in helping the company to arrive at that final number. An experienced CFO plays a key role in any business valuation by leveraging their financial expertise to offer strategic insights along the way and ensure an accurate final assessment of the company’s value. Read more: https://hubs.ly/Q03JPnM10 #CFOselections #BusinessValuation #Valuation

TRANSITION/FRACTIONAL TOP MANAGER   When a company is undergoing strategic change (restructuring plans, generational turnover, listing, management replacement) or simply when it’s growing rapidly, professional support in covering specific roles is often required, sometime just on a temporary or part-time basis. Transition/Fractional Top Management provides high flexibility and guarantees the employment of the most specific top professional skills for well-defined need, in a limited time span, without conditioning long-term corporate policies. Transition/Fractional Top Management allows constant monitoring of results versus the desired targets too. IIMC Italy makes available rapidly, throughout its Partner, excellent Transition/Fractional Top Manager: CEO, General Manager, CFO and Executive WHY TRANSITION/FRACTIONAL TOP MANAGER? Company choose Transition/Fractional Top Manager for: ·      Investment-effectiveness Creating a dynamic mix of permanent Manager and highly skilled Top Interim Professionals allows businesses the ability to increase or decrease manager numbers based on current demands, giving you more control over management costs – and morale. You can rapidly staff up or down in response to customer demand, special project, M&A and so on while at the same time lightening the load for Managers who are stretched too thinly. ·      Quick to get started A key benefit of Interim Top Professionals is the hiring process and their ability to hit the ground running. Instead of taking weeks and months, companies can bring in interim professionals quickly, getting them up to speed within days. As a result, businesses can see an impact almost immediately from their work. ·     Flexibility As businesses vie for a competitive advantage, they need to be able to respond quickly and strategically. Top Interim Professionals offer flexibility for businesses as they bring in the right top skills at the right time and for as long as needed. ·     Allows more project-based work The fact that Top Interims give bosses the ability to access skills that aren't available in-house opens up the door to more project-based work. Specific and high professional skills can be brought in to deliver specific projects that otherwise may have been put on hold. ·     A fresh perspective Interim Top Professionals keep up-to-date on current best practice ...      https://lnkd.in/g45TZvz https://lnkd.in/g7ms-Ne #ceooutlook #ceoinsights #businessplan #strategicplanning #strategicexecution #liquidità #transitionmanager  #finanzainnovativa #finanzaoperativaestrategica #fractionalexecutive #mentalcoaching #coachingexecutivo #mentoring #coaching #ceoleadership #cfoservices#consulenzadirezionale#topleadership&management https://lnkd.in/d4XJ7Fh4