Acquisitions

The processes involved in completing a successful acquisition are, in most respects, the same as that for the disposal of a business. Some of the key factors to consider are:

Identify targets - most owners are unlikely to want to sell other than for personal reasons - age / illness /family pressures.

How is the acquisition to be funded - if from own resources it is essential that consideration is first given to ensuring that the expansion of your existing business will not be impaired.

Management resources - can your existing management team support the growth in the business?

Facilities - if acquiring a manufacturing concern is there sufficient capacity in the existing plant. If some of the plant is to be moved from the new acquisition what are the timescales.

Retention of key individuals - are the terms of employment similar? How will they be harmonised - at what cost?

What is to be acquired - a purchase of the trade and assets is much simpler and less risky than a share purchase. A share purchase requires in depth due diligence since all the existing and potential liabilities will pass to the new owner e.g. pending litigation, pension fund shortfalls, redundancy costs of surplus employees.

Payment terms - in order to ensure retention of the customer base it will be better to make an initial payment with the balance of the consideration dependent on customer retention. This will require the continuing employment of the previous owners in some capacity - manger, consultant etc.

Competition - whilst it will not be possible to prevent the employees of the target business to set up in opposition restrictive covenants will need to be placed on the owners of the business and their family members if currently employed.

Valuations - profit potential or net assets or a combination of both.

Our role and fees

This is not as speculative as a disposal and it is therefore likely that we will negotiate a fee with break points for the work to be undertaken.