工作笔记：The Synergy a Seller Could Provide a Buyer

尽调项目上听到最多的词莫过于Synergy，百度百科说这叫协同效应，那M&A跟协同效应有啥关系呢？谁在为协同效应买单呢？协同效应包括什么？如何估值？如何选取合适的multiple？估值的基础是EBITDA还是税前利润？EBITDA要用过去三年的、还是未来五年的？小小的脑袋每天都充斥着各式各样的问题。

Cost savings, manufacturing efficiencies, access to new customers, and so on can produce value-adding business combinations that make 1 + 1 = 3. After all, synergy is the elixir that makes many business combinations make sense on paper. However, the challenge in valuing synergy is twofold:

1. How certain is it that the synergy will be realized? Some synergies, such as consolidating three underutilized manufacturing plants into two running at capacity, are relatively certain and immediate. Duplications in overhead can be wrung out and fixed assets can be more fully utilized. However, other kinds of synergies—such as combining R&D staffs to enable them to develop innovative, new products that neither R&D staff could have developed separately—could take years … if they succeed at all. Some M&A tacticians assume that combining two companies with related products will result in each’s salesforce selling more of the other firm’s offerings. Many a tear has been shed when these fine intentions fell to naught.

   
   

2. Assuming the synergies from a business combination have a good prospect of success, should the buyer or should the seller reap the benefits? Many sellers assume that they should receive most, if not all, of the synergy benefits. If 1 (buyer value) + 1 (seller value) = 3 (merged value), they think they should be paid for 2—the amount needed to bring the buyer’s value of 1 up to 3. They fail to realize that the buyer will spend a lot of money and assume most, if not all, of the risk to achieve those synergies. Many buyers assume just the opposite—that they should profit from the synergies by paying only the stand-alone value of the acquired business. In practice, it usually depends on whether the seller or the buyer has the most alternative deals from which to choose.

   
   

When considering various valuation methodologies, the investment banker will rely largely on comparable metrics to gauge value. For example, if companies comparable to the seller have been reported to sell for 6.75X to 7.50X EBITDA, that says a lot about the likely value of the company. However, especially after the 2007 to 2010 gyrations in the stock market, historical earnings data can be terribly misleading, for two reasons:

1. Earnings fluctuations. Most companies’ earnings, expressed as EBITDA, EBIT, operating profit, profit after tax, or whatever, dropped during the recession. Therefore, simple arithmetic says it takes a higher multiple of earnings to result in the same value of the company. The underlying value of the business may not have changed nearly as severely as the current earnings.

   
   

2. Value fluctuations. Even if a company’s earnings are consistent, today most buyers will be willing to pay significantly less for a company than they would have before the recession we are currently experiencing. A near financial meltdown has that effect on people; trust me. Even if they themselves are willing to pay a comparable price, they will be challenged to secure the necessary financing. All of this tends to result in lower acquisition value multiples.

Furthermore, the public valuation multiples will typically be based on historical earnings, either the last fiscal year or the trailing 12 months (TTM). The multiple on projected earnings can only be calculated by researching the consensus analysts’ estimate for a company’s future earnings, an inexact science at best, and applying these to a company’s current stock price. Since most companies forecast improving earnings, the price multiple based on future earnings will almost invariably be lower than the one based on past earnings. (After all, hope does spring eternal.) But here’s the trick: Many owners want to apply the stock market’s easy to ascertain multiple of past earnings to their own projection of future earnings! I have even seen experienced financial sponsors challenge my firm on this point because it results in a more conservative valuation of one of their portfolio companies. By doing so, they are only kidding themselves.

So when a prospective seller says the company is worth some figure, say 6.75X to 7.50X EBITDA, because the comparable transactions over the past three years were at these levels, I take that with a dose of salt large enough to risk raising my blood pressure. Acquisition multiples need a lot of interpretation to make sense, especially when they go back more than six months.

With multiple methods for valuing a company, how is a seller to determine what his business is really worth? Which valuation method is correct in a given circumstance? When faced with this question, I am reminded of an excellent class discussion in which I participated while at Harvard Business School.

The professor in my small business management class asked us to value a relatively complicated family business. It had a little bit of everything: multiple product lines, some of which were profitable and some not, multiple plants that might be consolidated, R&D investments that had the potential to develop cutting-edge new products, real estate, and tax-loss carryforwards. Three schools of thought developed, depending on the valuation method selected: one valued the company at $17 million, one at $24 million, and a third at $28 million. After the spirited debate over the merits of each methodology, the professor asked for a vote on what each of us would be willing to pay. The results were mixed, with the $24 million alternative garnering 60 percent of the votes with the remainder evenly divided between the other two alternatives.

One student refused to vote for any of the three alternatives because he had a different valuation theory. He said he could extract value from each of the company’s assets in a unique way, allowing him to pay an eye-popping $36 million! The class descended on him like wolves, challenging his valuation logic. Then the professor announced, “No, the student prepared to offer $36 million is right and the rest of you are wrong! Because if one buyer was willing to pay $36 million, then that is the highest and best price, and that is what the company is worth. Period.”

I have seen this simple lesson play out hundreds of times. The value of a company is the highest and best value to which a single willing buyer will apply his logic and be willing to pay. It does not matter what the consensus may be or the generally accepted valuation methodology may suggest.

• 买方在为synergy买单，承担能否实现synergy的风险；但买方往往认为自己仅需付出standalone price便能从synergy中受益。

• 企业的最佳估值是可达成交易价格，而不是某种约定俗成的教科书式的估值方法所计算的结果。