Getting your business M&A ready

Sean FitzGerald

Acquiring another business in your sector or a related field can help accelerate this process by increasing market share, developing supply chain efficiencies, spreading fixed costs or diversifying as well as improving exit options for your business.

However, you need to make sure you are properly prepared before going down the M&A route.

Firstly, it is important that you are clear and honest about your objectives and you and your business’s ability to take on an acquisition. Identify your key objectives and don’t let “deal fever” sidetrack them.

You also need to make sure that your own house is in order. A well-run business will more capably withstand the demands of an acquisition process and also make it more attractive to sellers wishing to preserve their legacy. It is also much more likely to be able to attract external funding to help pay for the purchase.

This brings us to another crucial point – how will you fund the transaction?

We see many companies that have been prudently managed in recent years that now have the cash reserves and confidence to go on the acquisition trail.

Others will need to seek external debt and/or equity finance, but for a well thought-out strategy and a well-managed company, options are available.

Which company should you look to buy and – importantly – who should you bring on board to advise you on the acquisition?

Finding the right target is key and choosing the right advisory team to support you will help enormously.

You may be aware of opportunities in your market, but your corporate lawyers can help you find others. Their investigations into the chosen target (due diligence) will flag up potential stumbling blocks.

The increasing level of compliance requirements on companies, including on issues such as data protection, the Bribery Act and the Modern Slavery Act, makes it even more vital that your advisors conduct a thorough due diligence process.

Throughout the process, you should be careful that you don’t lose sight of your key criteria and objectives and you should always be prepared to walk away if they are not being met.

You also need to consider post-deal integration of the new business.

Change is unsettling for a workforce: how are you going to calm fears and get the best out of people? How will you drive synergies between the two businesses?

Again, experienced professional advisors can assist with this and help to keep your business on the right path to further growth.

* This article first appeared in the Ward Hadaway Greater Manchester Fastest 50 Awards Supplement 2017.

For more information on the issues raised, please contact Sean FitzGerald.