The financial factors you consider to be important for an acquisition candidate might include the following:
• Share Price | • Asset/Liability Mix |
• Earnings | • Off-Balance-Sheet Risks |
• Financial Stability and Consistency | • Profitability |
• Quality of Assets | • Integration Costs |
• Capital Adequacy and Debt |
Share Price - will the price of the target enable the synergies to be achieved whilst adding value to your own share price?
Earnings - what level of additional earnings will be generated as a result of the transaction, in both the short and long term?
Financial stability and consistency - will the transaction add to your financial stability and the consistency of earnings?
Overall asset quality - what is the quality of the assets held by the target? Will the transaction improve your overall asset quality?
Capital adequacy and debt - what will be the impact of the transaction on your capital and debt ratios? Could it create any capital adequacy issues?
Asset and liability mix - what will be the impact of the transaction on your asset and liability mix, in terms of currency, interest rates, maturities etc.?
Off-balance sheet risks - how will the off-balance sheet risks be affected by the transaction? Will there be excessive exposures to any particular markets which will have to be managed?
Profitability - how will the cost/income ratio be affected by the transaction in the short and long term?
Integration costs - what are the likely costs of the integration?