How large of a company can you buy?

Let’s assume you’ve found a company that’s a great strategic and cultural fit.

• Can you speak to different acquisition types? For example, tuck-in, platform, or merger?
• What key metrics should you consider in the evaluation of the firm? (Revenue, EBITDA addition, growth rates, Return on investment)
• What’s the general guidance of how large a firm should be compared to revenue? (.5 to 2X revenue)
• What type of debt ratios should you consider?
• How do future earnings / cash flow considerations play in the size of a deal?
• If it’s a larger firm, how do you approach integration of the firm differently?
• Is there a quick formula that helps determine the rate of return for a firm or how many years are needed to receive a return
• Should you buy the biggest firm you can? (Discuss a small deal is as much work as a large deal)
• If you are buying a firm that’s bigger than you, how do you approach integration differently?
• How does working with a funding partner, like a strategic PE firm, change the size of deal you should consider?

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