Renzo DemartiniCase studies / Acquisitions
An acquisition that returned five times its price in EBIT.
As CFO of a window-furnishings manufacturer and retailer, through an A$500K regional acquisition that nearly fell over.
In short
- A vendor who tried to renegotiate at the last minute, and a deal that was saved, completed and integrated.
- The acquisition returned five times its A$500K purchase price in EBIT within 18 months.
01 The case · CFO
Situation, what I did and the result.
- 5×The purchase price, returned in EBIT
- A$500KPurchase price
- 18Months
- SituationAs CFO of a window-furnishings manufacturer and retailer, I was close to completing an A$500K regional acquisition when the vendor tried to renegotiate at the last minute.
- What I didI saved the deal, then completed and integrated the regional business.
- ResultThe acquisition returned five times its A$500K purchase price in EBIT within 18 months.
02 For your business
What it means for your business.
Two lessons from this deal. First, know your walk-away point. When a vendor reopens terms late, your model is what you negotiate with: what the business is worth to you, which assumptions carry that value and where you stop. Then the conversation is about numbers, not nerves.
Second, the value of a deal is decided in its first 100 days, and much of what decides it happens before day one. The sequence is in The first 100 days of an integration, and as a checklist in the post-acquisition finance checklist.
03 Questions
Common questions.
What should you do when a vendor tries to renegotiate late?
Go back to your model. Know what the business is worth to you, which assumptions carry that value and where you stop. Then the conversation is about numbers, not nerves.
Can you get the same result on my deal?
Results from past deals aren’t a promise of what will happen in yours. Board and investor support or Lead the change can bring the same approach to your deal.
Keep reading
Related reading and more case studies.
- Integration
The first 100 days of an integration
An acquisition is one decision, but an integration is a hundred smaller ones, and most of them should be made before the deal completes.
Read → - Reporting and systems
Reading a loss-making division
A division's P&L is a system. Before you act on a loss, make sure the reporting tells you the truth.
Read → - Case study · GrowthA$40M
Revenue from under A$10M to A$40M in four years
Pricing, brand, the sales funnel and capacity, with the finance function keeping up.
Read the case study → - Case study · Reporting and systemsA$300K
A loss-making division to A$300K profit in 12 months
A divisional P&L re-engineered so it showed where the loss came from.
Read the case study → - Case study · IntegrationA$100K
A$100K a year in cost synergies from a regional acquisition
Financial due diligence and the post-merger integration, with growth into a new region.
Read the case study → - Case study · Control21→5
Month-end close from 21 days to 5, then from 10 to 5
Two closes rebuilt, and reporting the board used for capital allocation.
Read the case study →
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