Danaher Case Study
Serial Acquirer Case Study:
Danaher Corporation
August 2010
New York
One Penn Plaza, 36th Floor
New York, NY 10119
Preliminary and subject to further review and change. See final page for important information about this document.
Copyright 2010 Fortuna Advisors LLC. All Rights Reserved.
Overview
• Despite the claim that acquisitions destroy value certain companies excel as acquirers and deliver outstanding value for shareholders.
• We studied the relationship between long term total shareholder returns (TSR) and different acquisition strategies and a variety of deal characteristics.
– The only trait that consistently has a strong positive relationship with long term TSR across each industry is acquisition frequency.
•
We call them Serial Acquirers and many generate outstanding results by being better at planning, executing and integrating acquisitions than their peers.
• Danaher Corporation is one of the world’s best serial acquirers
2
Copyright 2010 Fortuna Advisors LLC. All Rights Reserved.
Danaher’s M&A Strategy Emphasizes Returns
Danaher's Fundamental Performance
$1,600
16%
$1,200
12%
Acquisition Residual Cash Earnings
2009
2008
2007
2006
2005
2004
2003
2002
2001
0%
2000
$0
1999
4%
1998
$400
1997
8%
1996
$800
Acquisition Residual Cash Margin
Source: Fortuna Advisors Analytics, using CapitalIQ Data
Note: Acquisition Residual Cash Earnings (ARCE) is EBITDA + Rent + R&D Less Taxes Less Capital Charge Including Goodwill & Intangibles
Acquisitions Residual Cash Margin (ARCM) is ARCE as a % of Revenue
3
Copyright 2010 Fortuna Advisors LLC. All Rights Reserved.
• Even during the downturn in 2008 and
2009 Danaher delivered Cash Flow in excess of the required return on all capital
• This strategy creates value for shareholders and demonstrates the benefits of continuously redeploying capital into positive returns
Danaher Creates Value Through Superior Returns and
Growth
Residual Cash Margin
25%
Residual Cash Margin
• Danaher’s
Danaher Corporation
August 2010
New York
One Penn Plaza, 36th Floor
New York, NY 10119
Preliminary and subject to further review and change. See final page for important information about this document.
Copyright 2010 Fortuna Advisors LLC. All Rights Reserved.
Overview
• Despite the claim that acquisitions destroy value certain companies excel as acquirers and deliver outstanding value for shareholders.
• We studied the relationship between long term total shareholder returns (TSR) and different acquisition strategies and a variety of deal characteristics.
– The only trait that consistently has a strong positive relationship with long term TSR across each industry is acquisition frequency.
•
We call them Serial Acquirers and many generate outstanding results by being better at planning, executing and integrating acquisitions than their peers.
• Danaher Corporation is one of the world’s best serial acquirers
2
Copyright 2010 Fortuna Advisors LLC. All Rights Reserved.
Danaher’s M&A Strategy Emphasizes Returns
Danaher's Fundamental Performance
$1,600
16%
$1,200
12%
Acquisition Residual Cash Earnings
2009
2008
2007
2006
2005
2004
2003
2002
2001
0%
2000
$0
1999
4%
1998
$400
1997
8%
1996
$800
Acquisition Residual Cash Margin
Source: Fortuna Advisors Analytics, using CapitalIQ Data
Note: Acquisition Residual Cash Earnings (ARCE) is EBITDA + Rent + R&D Less Taxes Less Capital Charge Including Goodwill & Intangibles
Acquisitions Residual Cash Margin (ARCM) is ARCE as a % of Revenue
3
Copyright 2010 Fortuna Advisors LLC. All Rights Reserved.
• Even during the downturn in 2008 and
2009 Danaher delivered Cash Flow in excess of the required return on all capital
• This strategy creates value for shareholders and demonstrates the benefits of continuously redeploying capital into positive returns
Danaher Creates Value Through Superior Returns and
Growth
Residual Cash Margin
25%
Residual Cash Margin
• Danaher’s