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What makes an attractive acquisition target?

How can you tell if a company is worth buying? Cass Business School and Intralinks recently conducted a research project based on a 23-year study of 34,000 firms and 14,000 deals to discover just that. We asked Philip Whitchelo, Vice President of Product Marketing at Intralinks to summarise the findings. 

"The study looks at what makes a company attractive to buyers as an acquisition target," Philip Whitchelo explains. "We found 6 factors that were able to predict, with a very high degree of accuracy, whether or not a company was going to become an acquisition target." 

The key areas to look at are; growth, size, profitability, leverage, liquidity and valuation. Interestingly, the factors that make a private company more likely to be an acquisition target are different to public companies. 

For private companies, the research found that high leverage and large total size (relative to the company's peer group) were the most important factors. Conversely, the main factors for public companies are small size and low profitability. 

When asking private equity and strategic acquirers to respond to the findings, the researchers found that private companies with a relatively high debt had grown faster than their peer group, which made it a leading indicator of future growth opportunity. "This makes them attractive to acquirers," confirms Whitchelo.

Intralinks are currently roadshowing the findings at Mergermarket's M&A and Private Equity Forums in Dublin, Milan, Amsterdam, Johannesburg and Zurich. Download a snapshot of the research from Philip's presentation slides.

For more findings from the study, watch the full interview below. 




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Hannah Ogunlowo Speakers Acuris

Hannah is responsible for speakers and event programmes at Acuris. She oversees Debtwire's European restructuring, leveraged finance and direct lending conferences. Hannah leads content for Mergermarket's M&A events, including in leading conferences in Germany, Italy, Africa and the Middle East. 

Hannah Ogunlowo Speakers Acuris

Hannah is responsible for speakers and event programmes at Acuris. She oversees Debtwire's European restructuring, leveraged finance and direct lending conferences. Hannah leads content for Mergermarket's M&A events, including in leading conferences in Germany, Italy, Africa and the Middle East. 

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