In our experience, business owners who have identified the one party—or handful of likely parties—on the other side of the table often understand they need assistance beyond what their other advisors will provide, but wonder what an M&A advisor will do to add value. This is a case of “raising the bridge and lowering the water.” We’re able to attune our offering to the one-off transaction because it is our primary focus, not one we default into. And, we can charge less than traditional investment banks because we are not required to utilize and pay for the platform required to execute on full-out auctions.
The main point of this article is that the use of ESG objectives by investors is not depressing returns—not because the approach is compatible with return optimization, but because many private investors who say they are doing it, aren’t.
The subject itself is so distasteful to many market-oriented investment professionals, it was tougher than I thought getting this into print. John McNulty, the publisher of PEP Digest, noted that he’d avoided any mention of ESG for the past 16 years. He agreed to post this once he understood my perspective, but it was a bit like writing an article titled, “Ten Signs You Probably Don’t Have Dandruff.” The news is good, but who wants the reminder?
I’ve been an investment banker since 1995. Over this period, a handful of trends have come to define the sale of a private business—market-clearing auctions, the emergence of the adjusted EBITDA multiple as the primary valuation benchmark, and the widespread use of outsourced financial due diligence.
All of these developments reflected and contributed to what has been a period of elevated valuations, but it is not like any of them were on tablets handed down from a mountaintop.
They all were at a different place 30 years ago...
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