Value Creation for Merger or Acquisition
July 23, 2020
Value Creation for Merger or Acquisition (M&A)
Maximize M&A Value through Lasso Safe Synergies.
If you asked sport centers to name their most valuable assets, they might note elements such as contracted teams and athletes, high performance staff, money, intellectual properties and patents, physical property and training or competition centers, and even upper-level management. However, information is just as important to business operations, and centers should always look to maximize these assets.
Modern risk management has grown increasingly complex due to more scrutiny from the sport industry and shareholders. In many instances, centers will suffer losses because information was not transparent to relevant decision makers and risk managers. In short, information adds yet another potential threat that centers need to account for.
“Because center information is vital to conducting transactions, the link between business multiple and thorough record keeping of safety policies is very close. Treating record keeping as an identifiably separate component of risk enables centers to become more sophisticated, focused and successful in managing risk and raising value.” Pamela Aven, Lasso Safe co-founder
Records are vital to risk management – records can be used to prove safety compliance, quickly and discretely resolve false claims, build the trust of stakeholders, raise shareholder value and inform business decisions. Contrarily, lack of safety protocol records can lead to insufficient evidence in the unfortunate case of a claim, complicate M&A synergy, and lower center value and profit. Records are more than just financial accounts – they can be related to staff management, safety operations and athlete protection policies as well.
Lasso Safe’s Value Creation Plan maximizes the center's Lass Safe Certification through thorough record keeping of regularly and measured safety operations and management, along with outreach programs to inform the community, shareholders and the sport industry of the center’s sophisticated investment.
For the acquirer:
By enacting Lasso Safe Certify and implementing the Value Creation Plan in both the acquirer and the target, the acquirer can shore up its market valuation during the period following the merger announcement, offsetting the erosion in market value that frequently occurs as investors react to the uncertainty engendered by such announcements.
For the target:
Although synergies can play a key role in price negotiations and in supporting the acquirer’s stock valuation following the deal announcement, companies generally focus only on cost-saving synergies when communicating such values to shareholders, omitting any mention of potential synergies on the revenue side. Indeed, 94 percent of merger announcements that disclose the value of synergies mention only cost synergies or don’t mention the specific nature of the synergies at all. By contrast, only 5 percent of announcements that disclose synergies mention revenue synergies.
With such an emphasis on cost synergies, Lasso Safe Certified centers who follow the Value Creation Plan gain favor among acquirers by demonstrating thorough, third-party approved documentation that tracks and measures the effective strategies implemented for risk assessment, risk reduction, lowered employee turnover, lowered customer turnover and lowered costs relating to abuse and claims. This documentation system is reproducible, while also flexible, supporting synergistic options for the M&A.
To learn more about Lasso Safe's Value Creation Plan for M&A, contact a Lasso Safe Engagement Administrator.