The environment driving consolidation in banking, insurance, and asset management will continue to impact profitability and drive the need for scale. At the same time, economic risk is currently very high which prevents acquiring firms to grow their way out of bad deals.
Traditional valuation approaches like discounted cash flow, comparables, and multiples, facilitate cyclical M&A activity in that these methods often support increasing prices on the way up and then cause acquirers to pull back on the way down. Graham and Dodd offers an alternative view of value that could be leveraged by both buyers and sellers in all deal environments.
Financial institutions can benefit from PwC's multi-phased approach which includes: