Mergers and Acquisitions
Mergers and Acquisitions is a very specialist field of business life, often also referred to as Corporate Finance, or Business Broking. It’s about buying and selling businesses, and the many 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
Selling a business is undertaken for differing reasons from retirement to 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.
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.
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.
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