Screening for M&A Targets?

Hey, question here. What tools do you use when trying to find private companies, subsidiaries / segments, etc that would make for a good acquisition target? Do you use CapIQ? Or does that mostly just have data on publicly traded companies?

Thanks!

 

In my experience it is very difficult to find information on private companies' EBITDA and other financial metrics. Typically the senior professionals will be familiar with the major private players, and use investment bankers as a source for 'gossip' around which companies are active, how they are doing, etc. It's very much a networking game on the private side, although it is sometimes possible to piece together a private company's financial picture by doing a lot of research and making general assumptions about the business.

 

As NuckFuts stated, it's going to be very difficult (if not impossible). CapIQ sometimes has these numbers, but they do not provide a first-hand source for them. Hoovers, Manta, and some other website will also have some financial information, but those are not completely reliable sources, nor do they provide sources for their claimed financials.

If you're putting together some buyside acquisitions list for an internship, you're not going to find much on the financial side, but your bankers should know this.

 
Best Response

In my experiences, an M&A firm advising on the buyside is rarer and only engaged if the transaction is large and the buyer is looking for someone to really broker the deal for them...

I think if a client does approach a ibank requesting acquisition targets, they've usually got something in mind and can point the bank in the direction / industry they're thinking... again, without competitive guidance from management, it's difficult to really identify small private companies.

Again, if a company is being sold and a strategic is contacted for a bid, then the strategic may do the work on their own if it isnt a material transaction and doesnt require more work, ie debt raise / equity raise. If the merger / acquisition is large comparitive to the acquiror, the chances are they will engage a bank to help with the merger / acquisition scenario, diligence, debt/equity raise and manage the risk associated with acquisition. Last thing they want is to be insolvant because they didnt want to pay fees to a bank...

 

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