Merger & Acquisition Strategy Development
Axiom Valuation provides consulting services to clients to help aid in the development of a comprehensive merger and acquisition strategy utilizing Axiom’s Value Circle Framework. The Value Circle Framework is based on seven straightforward principles:
- 1. Business Value is maximized when financial policies are properly aligned with business strategies. The value of expensed after-tax cash flows from assets are maximized and after-tax financing costs are minimized.
- 2. The more competitive your market, the more difficult it is to maintain a competitive advantage. The less likely any strategic initiative will create firm value.
- 3. New investments need to be scrutinized and undertaken only when the expected rate of return exceeds the cost of capital required to finance it. The present value of expected cash flows exceeds the present value of net new investments.
- 4. Do not acquire the asset if the price exceeds the incremental value it is designed to create. Incremental value reflects both the direct expected cash flows and any options embedded in the assets being acquired.
- 5. Public firms will always pay more for a target than private firms.
- 6. If it is worth much MORE to outsiders, re-deploy into your sweet spot. Measurable competitive advantage ensures that the value of the firm is maximized.
- 7. A strategic buyer will always pay more than a “Business as Usual” buyer.
Axiom Chairman and co-founder Dr. Stanley Feldman is a noted valuation expert and a standing member of the FASB Valuation Resources Group. Dr. Feldman developed the Axiom Value Circle Framework in his work on the book, Principles of Private Firm Valuation (John Wiley & Sons). Dr Feldman has extensive consulting and academic experience in valuation and is the principal author of What Every Business Owner Should Know about Valuing Their Business (McGraw-Hill Professional Books, November 2002).
Axiom Valuation Solutions utilizes the seven Value Circle Framework principles to help lead our clients through a process that uncovers the ideal acquisition growth strategy to produce the maximum return potential.