[Michiel Drijvers]

What is the right price to buy a company?
During pre-due diligence the team is looking for synergies that can be achieved and as such can generate value for the company.
This could allow the price to go up. But how does the seller and the buyer know that the deal is at the right price?
Or said differently, how does the buyer know he paid too much? how does the seller know he sold for a too low price?

[Tobias Frauenschuh]

There’s no single “right” price — it depends on each party’s expectations. Buyers pay based on synergies and future potential, sellers aim to maximize value through competitive processes. If both sides feel the deal supports their strategy, it’s likely a fair price.

[John Sitler]

As a rule, I do not believe synergies should be considered in the price. Yes, synergies should be integral to the acquisition thesis, but these come with risk, and should not be accretive to the offering price. As studies have shown, the majority of M&A transactions are failures for the acquirer and are good value for the sellers. Instead, prices should be set with an intent to be ‘fair’ in comparison to NPV and market comparables. Of course, there is often pressure as M&A practitioners to close deals, and standing firm to the ‘right’ price can be easier said than done.

[Lauren Puffer]

I agree with John in that the anticipated synergies shouldn’t be considered in the offering price. While synergies are often notes as part of the strategic rationale of the deal, the price offered should “work” for both sides based on fair value and the market.

[Jihad Saadeh]

Determining the right price to buy a company can be challenging. During the pre-due diligence phase, the team aims to identify potential synergies that could add value and possibly increase the price. But how can both the buyer and the seller be sure the deal is fair? This is where proper evaluation through due diligence plays a crucial role.

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