You don’t have to search too long before finding material alleging that M&A destroy value. NYU Professor Aswath Damodaran goes as far as to say that asking an investment bank to fairly value an acquisition target is like ‘asking a plastic surgeon to tell you your face is perfect’. When the so-called father of modern valuations is so vehemently against the practice, one might wonder why the volume of M&A transactions continues on its upward trajectory.

Context is required here. Firstly, most academic studies on M&A use event studies to measure the success of transactions. That is, when news of the transaction is publicly released, we assume the stock market’s response to be a gauge of the success or otherwise of the deal (success, as always with the stock market, being a translation for ‘future earnings’). There’s at least one major flaw in this, which even academics will admit to: this assumes that the stock market makes the right call all the time.

Secondly, to give some context on Damodaran’s remark: he’s not arguing against the logic of M&A transactions, as much as it may appear to be the case. His argument is based around the problem inherent in deals: generally, a part of the brokerage fees are based on transaction size. Even we at Morgan & Westfield, as M&A business brokers and M&A advisor, agree that this has the potential to lead to adverse outcomes. But again, it’s far too simplistic to assume that a process that may lead to bias does and will lead to bias.

The economy at large is full of situations where adverse incentives exist.

What is a “business concept”? A business concept is an idea that can be used for commercial purposes and typically centers around a product or service that can be sold for money. A good example of a business concept would be the “magicJack”. The magicJack is a telephone product that enables people to make low-cost phone calls using their internet. The magicJack has been proven to work and has sold in the millions.

Can I sell my business concept?

In order to sell a business concept, it must have commercial validity. It should preferably be proven that it is commercially viable and can generate revenue. There is a common misconception that business ideas alone have value. There is a proliferation of ideas and to most people, they have little value. Most business owners are inherently idea-oriented people and most of them already have dozens of ideas that they wish to implement but don’t have the time. There are several ways, however, to sell an idea or concept that you might have.

How can I sell my business concept?

Protect your idea

If you can protect your idea with either a patent, trademark or some other form of intellectual property, then you may be able to develop significant value. Because many ideas can quickly be copied, few are willing to pay for an idea if others can easily copy it.

Prove that it works

If you can prove that your idea works even if you cannot patent it, then you greatly increase the chances that you can sell the concept. Business people are idea people and most business people have