ibd M&A, Mergers and Acquisitions
Mergers and Acquisitions is a very specialist field of business life, often also referred to as Corporate Finance, or Business Broking. In short, it’s about buying and selling businesses, and the myriad of options that lie in between either a complete exit or takeover.
Most people will only ever sell one business in their life, but there are excellent opportunities to grow an existing business with well executed acquisitions.
Selling a Business
This is typically done for a “human” reason, most obviously retirement, but it is also often included in a downsizing or streamlining operation, or as part of a long term plan to retirement. Most exits will take around 6-9 months to facilitate, plus, there will be a handover period, and, especially in today’s market, almost certainly a deferred payment arrangement or earnout. This varies with each example of course, but starting the process at least 12 months before the desired final exit is essential.
The whole process can be significantly streamlined, with a better chance of success at a better price (and terms) if a well structured exit plan has been implemented. This can run from anywhere around 6 months upward, but the sad reality is that the majority of businesses come to market under some form of distress and not as the culmination of a structured effort. However, a good business will always command strong interest and values, with reasonable terms, especially if the sale is handled professionally.
There are lots of reasons to consider buying a business, from a first acquisition, straight forward revenue growth or market share to removing a competitive threat or acquiring something specific of use, such as IP, staff, clients, licences, distribution agreements or know how. Usually the bulk of what is acquired is referred to as “Goodwill” though fixed or tangible assets of some sort will almost certainly be included. The majority of acquisitions are made by real world “medium sized” companies (£5-50M) taking over (generally) smaller companies, though there is no limit to the scope of how deals can happen.
Other common completions are by way of MBI / MBO, Private Equity, managed portfolios plus an infinite variety of merger or strategic alliance permutations. Ideally, an acquisition will have significant strategic benefits with strong synergies between parties, along with opportunities to consolidate, remove costs and take advantage of economies of scale. Often they are opportunistic – as a result of seeing or having a sale memorandum sent – but they can also arise from a properly managed search, whether targeted at specific prospects or as part of a wider campaign.
As a general rule, there are no rules, leaving plenty of scope for creativity. The important thing is to match a willing buyer to a willing seller and structure a deal that best meets both the objectives of all parties concerned and provides the most advantageous mutually beneficial outcome.
If you are thinking of selling or buying a business it is vital that you talk to an expert at an early stage – our ibd M&A advisers are highly experienced professionals who can facilitate the process in the most effective way.