The number of Mergers & Acquisitions (“M&A”) completed in the North East of Scotland during 2016 was significantly lower than we have seen in recent years but this does not necessarily mean that now is not a good time for business owners to consider a sale.
Large corporates need to deliver continued growth to satisfy investors and cash rich companies are seeing little return on their money in the bank. The solution in many cases is to make a strategic acquisition and we expect to see an increase in M&A activity during 2017.
A well run disposal process will always increase the chances of a successful sale and maximise the value returned to business owners.
If you are considering selling your business, here are some tips to ensure a successful outcome:
Engage professional advisors - experienced financial and legal advisors should be appointed at the outset to structure the deal and project manage the transaction; allowing the management team to focus on running the business and maintain strong trading performance.
Do your diligence on the purchaser - before investing considerable time in meetings with the purchaser, providing confidential information and negotiating terms, ask whether the purchaser is able to deliver what they say they will.
Ensure information provided is accurate - purchasers will use information provided as a basis for their offer. Any adverse adjustments identified during due diligence will usually lead to the initial offer being revised downwards while any positive adjustments will not necessarily result in an improved position.
Don’t get too close to the purchaser - it is important to maintain an arm’s length relationship with the purchaser until the deal has completed. Too often we have seen transactions where the purchaser will look to get very close to the vendor during the process and use this relationship to negotiate directly with the vendor rather than via their advisors.
Deal with potential issues early - it can be too easy to ignore potential issues and hope that they will go away rather than deal with them as they arise. This can lead to deals collapsing late in the process when issues are finally discussed and neither party can reach an agreement.
Consider the most efficient tax structure - most purchasers are prepared to be flexible when structuring a deal to ensure that the vendor can take advantage of any tax benefits available. Therefore, it is essential to seek specialist tax advice and structure the deal efficiently to minimise tax and any associated risks.
Avoid deal fatigue – finally, to ensure the transaction is completed within a reasonable timescale, ask the purchaser to produce a timetable detailing all key stages of the process up to completion and then monitor this closely.
The Corporate Finance team at Anderson Anderson & Brown LLP (“AAB”) have advised on over 500 transactions with a combined deal value of over £5bn. For more information on how AAB can assist you or to arrange a free consultation, contact Brian McMurray on 01224 625 111 or at firstname.lastname@example.org