M&A Quick Analysis Worksheet

Part 1: Financials

Revenue: If the target acquisition candidate has a revenue stream, divide the expected purchase price by the average yearly revenue stream over the past two years.

[ ] The result is less than or equal to 2. (4)
[ ] The result is more than 2 but less than or equal to 3. (4)
[ ] The result is more than 3 but less than or equal to 4. (3)
[ ] The result is more than 4 but less than or equal to 5. (0)
[ ] The result is more than 5 or the company has no revenue stream(-1)

Profit: If the target is profitable, divide the expected purchase price by last fiscal year’s earnings before taxes, depreciation, and amortization. (If not profitable, score 0.)

[ ] The result is less than or equal to 5. (6)
[ ] The result is more than 5 but less than or equal to 7. (4)
[ ] The result is more than 7 but less than or equal to 9. (2)
[ ] The result is more than 9 but less than or equal to 11. (0)
[ ] The result is more than 11 or the company is not profitable. (-1)

Stock Value: If the target is publicly held, divide the dollar value of the target’s outstanding stock by its last year’s net profit. Do the same for your firm.

[ ] The target’s valuation is more than twice your firm’s valuation. (5)
[ ] The target’s valuation is more than your firm’s valuation. (3)
[ ] The target’s valuation is identical to your firm’s valuation or the target is not publicly held. (0)
[ ] The target’s valuation is less than your firm’s valuation. (-3)
[ ] The target’s valuation is less than half your firm’s valuation. (-7)

Subscore #1: Add up the points for each answer: _____ (SS1)

Part 2: Product

Uniqueness: The target’s offerings are:

[ ] Absolutely unique in this industry (5)
[ ] Better than other offerings (3)
[ ] About average for the industry (1)
[ ] In need of some work to come up to par (-1)
[ ] Obsolete and out of date (-6)

Customer Base: The target’s product offerings have:

[ ] A fanatically loyal user base (4)
[ ] An enthusiastic user base (3)
[ ] A set of early adopters (2)
[ ] Some interested potential customers (1)
[ ] Existing customers who are actively hostile (-5)

Market Share: The target’s product offerings command:

[ ] A major share in a rapidly growing market (7)
[ ] A minor share in a rapidly growing market (3)
[ ] A major share of a mature market (3)
[ ] A minor share in a mature market (2)
[ ] The product has yet to establish a market (-2)

Subscore #2: Add up the points for each answer: _____ (SS2)

Part 3: Personnel

Competence: In general, the target’s management:

[ ] Possesses unique knowledge and experience (5)
[ ] Would be a big asset inside any organization (3)
[ ] Are about average for the breed in this industry (2)
[ ] Would be accepted, but without enthusiasm (1)
[ ] Could do cameos in a “Dilbert” comic strip (-3)

Uniqueness: In general, the target’s employees:

[ ] Possess technical skills that are impossible to find elsewhere (7)
[ ] Would be extremely expensive to recruit separately (5)
[ ] Have compatible skills with your employees (3)
[ ] Are barely adequate to the tasks at hand (1)
[ ] Are candidates for layoffs soon after the merger (-4)

Culture: Our corporate culture compared to the target’s corporate culture is like:

[ ] Manhattan compared to Queens (5)
[ ] New York City compared to Boston (3)
[ ] New York State compared to Arkansas (-1)
[ ] The United States compared to Kazakhstan (-5)
[ ] Planet Earth compared to “Bizzaro” world (-10)

Subscore #3: Add up the points for each answer: _____ (SS3)

Part 4: Your M&A Strategy

Rank the following strategic reasons for your M&A from 5 (highest) to 1 (lowest) according to their importance to your firm:

Improved revenue and profit. ________ A
Reduce cash on hand ________ B
Obtain advanced technology ________ C
Get hard-to-find personnel ________ D
Expand into new markets ________ E

Final Scoring

Multiply A and B and SS1: _________
Multiply C and E and SS2: _________
Multiply D and SS3. Quadruple the result: _________

Add the subtotals to get your Final Score:

For an explanation of how to interpret the final score, see this article on BNET that is a part of this BNET Report.