Buy or Be Bought? Achieving Killer Whale Status in Shark Infested Waters

by Nicolai Heidenreich

There are two different reasons for a ship owner to enter the merger and acquisitions market, either to buy or to sell. A company may be looking for a target for any of the reasons set forth in the previous article, or it may be in the market to divest all or part of its operations for many of the same reasons. This article deals with the process of buying or selling a ship owning company which is distinct from buying or selling individual vessels, a process I presume owners are familiar with.

In the following pages, the methods used for valuing a company are explained. These methods are what investment banks do when hired as merger and acquisition (M&A) advisors. We first look at an acquisition, providing an explanation of the valuation methods used, accounting considerations and other important issues a ship owner should consider before initiating contact with an advisor. The second part of the article views an M&A deal from a seller’s perspective. The valuation methods for either process are the same and are therefore covered in the “buyer” section of the article. Both sections of the article will examine the process of buying or selling up to and including negotiations and execution of the deal.

This is only an excerpt of Buy or Be Bought? Achieving Killer Whale Status in Shark Infested Waters

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