This includes planning the sale, the valuation, the search for a synergistic acquirer, and the conduct of negotiations leading to a closing. The acquisition advisory firm must be concerned only with the seller's best interests, and not with simply closing a transaction at any price. The expected incremental future earnings dictates the acquisition price. Synergistic benefits related to an acquisition increase the incremental future earnings realized by an acquirer. These benefits make the companies' combined profitability after a sale higher than the total for the two operating separately.
Financial buyers bring no synergy to a deal and, therefore, are incapable of paying a premium price.
Many companies feign interest in an acquisition to obtain information about the selling company and its business. A seller's truly proprietary information should not be divulged to a prospective acquirer, until a LOI has been executed. Certain factors should be addressed prior to the sale, if a seller is to get a premium price. The multiple applied to expected future earnings or cash flow will vary depending on the long-term growth projected for the selling company and the strength of its business foundation at the time of acquisition. Taking the time to investigate and strengthen the seller's business foundation will increase the transaction price.