hello I'm Andrew Campbell and this is David Smith and we run the best mergers and acquisitions course in Europe and the net in the next few minutes we're going to give you five tips that will make you a lot of money in acquisition deals so listen up tip number one tip number one is about incremental value every deal needs to generate some extra dollars some extra pounds some extra euros from the combination of the two organizations and I'm not talking here about 5% extra or 10% extra a minimum of 50% extra in fact I don't
really get excited until I can see a hundred percent extra as a result of the combination 200% 300% and you have really exciting deals David what do you think Andrew I couldn't agree more I think I hear so often companies doing things for strategic reasons or to get into a new market and they just don't seem to have remembered that the whole purpose of doing a deal is actually to create incremental value so there is no increment so the deals don't succeed right on the button now tip number two David tip number two tip number
two is don't listen to your advisors or if you do so listened very selectively the reason I say that is because most companies negotiate a fee with their advisers which is contingent on the deal going ahead so guess what you get advisers who are motivated to do the deal even if things begin to look a little bit sticky so consequently you have to be aware that the advisers are going to Incline you to want to do the deal even if in their heart of hearts they feel it's maybe not the right thing so be very
careful when you listen up to what they say and this is something that Warren Buffett world's richest man has spotted he came up with the idea that every large deal should have a consultant working on the deal who's only gets paid or only gets a bonus if the deal doesn't go through so in the deal team you've then got you know the advisors who are all desperate to make the deal happen and you had somebody there who gets paid if it doesn't happen a fascinating way I must say but Andrew what is tip number three
tip number three tip number three is about revenue signatures the data is absolutely convincing deals that are driven primarily by revenue synergies that synergies that give extra sales as a result of the combination extra sales from cross selling extra sales from having a stronger position in the marketplace you know extra sales from better utilization of Technology deals that have extra sales perform better than deals that are driven primarily by cost savings so look out for the deals where the prime driver is revenue signatures tip number three days tip number four even owe to another four
okay go for it tip number four is create an implementation plan and create it early and make sure you know who is going to be involved in the implementation process because what you want to do is make sure that those people are also involved in the acquisition itself the reason being you want their fingerprints all over the acquisition plan so that they will then be responsible for delivering on the deal later what you're trying to build up here is commitment and commitment comes when you buy into the process buying in and then being responsible for
delivery is critical and that's why I say create an implementation plan and then and created early and then make sure you get delivery on it tip number five hundred tip number five now tip number five is another tip I've stolen from Warren Buffett margin for error one of his great policies in making investment decisions is there should be a margin for error that if things don't turn out as the paperwork suggests that they are the deal still looks good and this is true for acquisitions just as it is for investing in stocks and shares if
you find that you're scraping the barrel to generate enough synergies to justify the deal price don't do it go back to bed if you find that you are there haven't got the management that you would ideally like to have to lead the implementation process cut off negotiations you know if you're not convinced that the other side are being completely straightforward with you and the deals are tight one don't do the deal unless you are comfortable that the deal you're doing is going to create a lots of value and has room for it to be worse
than you thought it was going to be you are chasing the wrong sort of deals most deals look much worse three years after than the day you closed negotiations under a great tip and altogether five great tips but guess what on our making successful acquisitions program at the average business school we have got a whole lot more tips which we love to tell you so what we'd like you to do is sign up for the program come and hear us you
