Rosenfeld: If an Acquisition Isn’t Cheap, Don’t Do It

The video discusses market trends, particularly the challenges of finding cheap companies when markets rise. It highlights the late stages of the credit cycle and the impact of low interest rates on stock buybacks. The timing of stock buybacks is crucial, with boards often buying back stocks at high prices. The video also explores the use of cash flow for buybacks or dividends and the strategic considerations involved. Finally, it examines acquisition strategies, emphasizing the importance of appropriate pricing and the pitfalls of revenue-driven acquisitions.

What is a significant challenge when the market is on the rise?

• Finding cheap companies

• High inflation rates

• Decreasing stock prices

• Increasing interest rates

Why do companies often buy back their stock at the wrong time?

• They are influenced by market rumors

• They wait until the stock price is high

• They lack financial resources

• They follow competitors' actions

What is a potential downside of using cash flow for stock buybacks?

• It reduces company revenue

• It always results in financial losses

• It may indicate a lack of strategic ideas

• It can lead to increased debt

What should companies consider when deciding on acquisitions?

• The size of the acquisition

• The number of employees involved

• The popularity of the acquisition

• The potential to add value

Why do many management teams favor acquisitions?

• To diversify product offerings

• To improve employee morale

• To increase company size

• To enhance management compensation