Brad Jacobs

So if you can find a business that can grow both price and volume and productivity,

you have ways to continuously improve the operations and grow your margins, that's a great business.

And I'll go another step further.

Perfect business for me, and this is a key point for me in every acquisition I've ever done, what's their turn on capital?

Because at the end of everything, that's what creates shareholder value.

What creates shareholder value is you have a finite amount of debt and equity

You need to put that to use and you have to get back a lot more capital than you put out.

That's what it's about.

And a business that has a high ROIC, whether it's in favor, whether it's out of favor, whether it's the fad, a moment, it doesn't matter.

I've seen an interesting business, maybe not perfect, but definitely good enough and would love to buy it, but I can't buy it at a price that makes sense.

So the IC in ROIC matters.

So the IC in M&A is the purchase price and whatever you're subsequently going to put into the business.

If there's CapEx improvements, invested, you want to grow it and that requires capital, the aggregate of your purchase price and how much money you're going to put in over the next year or two, assuming you're going to put in rather than take out money,

That's your invested capital.

And that's what you have to generate a return on.

So the purchase price is very important.

And you must stay disciplined on price.

If you overpay for an acquisition, you're in a hole.

And it may be many years of destroying value before you're creating value.

That's a sin.