Deal Sourcing

Devon uses its extensive network of contacts in the public and private equity markets to identify highly value accretive acquisition candidates for our clients. In some cases, when public company clients have attractive levels of cash profitability, but virtually modest growth potential in existing markets, Devon has become an extension of our client companies’ corporate development department with special focus on the arbitrage of valuations in the public and private markets. In many cases, Devon has identified private equity owned properties that can be purchased at a substantial premium to the private equity owners’ expectations while generating substantial value.

In one recent case, Devon assisted a client in the exclusively negotiated acquisition of a private equity portfolio company that increased our client’s value per share by 15% on the day of the announcement of the deal. Of 11 accretive acquisitions carried out over three years, 70% of the transactions, accounting for two thirds of the client’s 50% compound growth in per share valuation resulted from transactions with private equity sponsors.

In another case, a public company client was able to win an auction that added 30% to the company’s market value per share in which the competition was entirely private equity firms. Devon’s valuation metrics and extensive experience with the private equity industry made this transaction possible.

When a Devon client decided that the “ask”  was too rich on a transaction with substantial “strategic merit”, Devon was able to propose a “carve-out” of a portion of the acquisition target that was, in fact, more value accretive than the transaction as originally proposed by the company’s investment bank. Because the seller valued the portion that was left behind but our models valued it at a negative contribution, the deal closed, because it was better for both the buyer and the seller.