A company whose growth is driven by an aggressive debt-financed merger and acquisitions strategy can end up with financial statements that are tricky to interpret, according to Michael Gatto, author of a new report on what analysts can learn from the rise and fall of First Brands.
Such “serial acquirers” can hide flaws in their underlying performance – at least, they can hide it from analysts who fail to disaggregate revenue growth into organic growth on the one hand and the acquisition spree’s own numbers on the other.
