Mergers & Acquisitions
Mergers and acquisitions are the process of purchasing a business. This could be two business wanting to come together, buying a competitor, the management team wanting to buy the business from the existing owner and so on.
M&A transactions are very specialist and can often be very complex.
Some of the better known corporate finance teams concentrate on the larger transactions however the same complexity can exist in smaller transactions. In fact, it’s often more difficult as the people involved in the transaction have little to no experience of this type of activity so the level of support is key.
How does it work?
First things first, you want to have a high level understanding of the opportunity. Information such as, purchase price, what you are actually buying, a detailed understanding of the business you are acquiring and some historic financial information. Once we’ve established the requirement we can start to map out what is and isn’t achievable from a finance perspective. This may mean that you need to go back to the current owner and renegotiate the initial terms. At this stage we would have already spoken to potential lenders to make sure they have appetite to support in principle.
You will need to put together detail finance analysis and financial forecasts. Often a lender will want these produced by a finance professional i.e. accountant or suitable qualified individual/business.
Now that we know we can finance the transaction we can proceed to formal application with consideration given to legal structure etc. No need to worry about that it this stage, we’ll help you shape that along with the advice of other professionals.
A tailored approach to M&A
We have many years’ experience in working with business across all sectors to facilitate these types of transactions. We can quickly assess whether a purchase is financially viable, cutting out a lot of time and pain at the early stages. With a large panel of lenders and some great lender relationships we know who will have appetite to help and who won’t. As we explained, these transaction are often complex and are usually highly leveraged (disproportionately higher loan amount to security/balance sheet value) so not all lender will look at them.
We will help demystify the process and make sure you completely understand what is happening at each of the stages… after all, you are the ones repaying the monies.
We work with all sectors. We have seen most if not all types of businesses. We always start with a blank sheet of paper to make sure we truly understand your business and the target business. You can have bad businesses in good sectors just as you can have good businesses in bad sectors, so taking a tailored approach to any transaction is key.
There are a number of different security vehicles we can use to provide the lender comfort. Here’s our blog on security to give you an insight. The security suite will be determined through the process. Obviously, the lender will want as much as they can get, whilst you will want to give as little as possible. Expect to be able to demonstrate your commitment to the transaction to give the lender the confidence to support you.