Strategic Buyer

See: Strategic Alliance.

“Strategic Buyer.” Such a loaded phrase among bankers. Translation: you the buyer, if you want this property, are going to over-pay for this acquisition. It’s “strategic.” It has hidden value...value that isn’t obvious just looking at the prima facie numbers. You need to look deeper. Dream a little, baby. Buy and do the math on the synergies.

The acquisition you’ll take has $100 million in revenues, $80 million of costs. When folded in, you can fire 2/3 of the employees, shut down 3 factories, get rid of buildings, and that $80 million goes to $30 million, and the $100 million, with better pricing power, goes to $120 million...and all of a sudden, the $20 million in profits it used to have...now has $90 million.

So it’s strategic. Big. A game-changer. You take the other guy’s rook and sacrifice a pawn. Eventually, almost no matter what, you win.