Acquisitions can be a fantastic way to grow a business: they enable you to access new customers and markets. But only if you can identify the right business at the right price. Typical buy-side “M&A” requires careful evaluation and multiple work streams, including developing a clear set of acquisition criteria, identifying and approaching targets, evaluating businesses, securing funding, deal structuring, tax considerations, due diligence, negotiation tactics and guidance through the legal process.
While often neglected, ample consideration of how the target will be integrated and the knock-on impact to existing operations is also crucial to preserving value post-deal and should be assessed and borne in mind throughout the whole transaction.
Our team’s proposition, as your prospective Corporate Finance adviser, is project managing and supporting this whole time consuming, technical and multi-disciplinary process alongside you. We break it down in to manageable stages for our clients.
Due diligence (DD) is the stage at which you will typically incur most time and cost in the process, and the stage at which the deal is at the greatest risk of derailing if not carefully managed. DD is the process whereby directors satisfy themselves that a proposed transaction is entered into after due and careful enquiry and that all relevant regulatory and legal requirements have been properly complied with. This usually includes accounting, tax, legal, HR and environmental considerations, as well as other factors specific and bespoke to the deal in hand.
We work with our clients to carefully develop DD procedures, and to provide assurance and reveal information around the risks identified. We give our clients confidence, facts and supporting evidence which is central to their decision to proceed, as well as being a key of the ongoing deal negotiation process.
Going through an M&A process, even a small one, is a big step for any business. We always say that there are five main points to consider during what can be a lengthy and complicated process:
- Is this acquisition the right one? And is the price right? You should be prepared to walk away if the answer to either of these questions at any point becomes “no”.
- Focus on the key deal issues. While there is always an element of confirmatory due diligence, identifying the key issues which impact on appetite or price at an early stage and focusing efforts on getting the answers to these points is key.
- Never underestimate the management time and effort required during an M&A process.
- Don’t forget integration and the costs and risks associated with achieving synergies – in both time and money. Too many successful acquisitions ultimately fail by simply not giving post acquisition integration the time and thought that it requires.
- Take our advice – our internal analysis suggests that our experience and guidance saves our clients a multiple of 10 times our fee on the purchase price on average.