Acquisition transactions can be a complex and challenging journey. We’ll guide you to the right destination.
Expert advice is needed to support a buyer’s assessment of a potential acquisition. Our team have the pedigree to analyse detailed financial information so that we can help you make well informed decisions when they count. We’ll project manage the deal from beginning to end and make sure any bumps in the road are skilfully navigated.
We can advise you on valuation, making sure that every avenue is thoroughly explored so that you can be assured the business you’re buying has true worth.
Beyond the valuation of a target company, there are several other reasons shareholders and investors may require business valuations. These can include:
- employee share option schemes
- business proposals for additional investment
- divorce
- death (probate)
- existing shareholders transferring or selling shares.
The valuation of a private business is subjective and presents a unique challenge to investors and shareholders due to the investment being unquoted and not easily comparable without expert insight and industry data.
The true valuation of an asset comes from what a willing seller and willing buyer is prepared to exchange for an asset. In addition, there are several widely acknowledged and accepted valuation methods and techniques which are used to arrive at a fair commercial valuation, backed by financial analysis. The results of this analysis forms the starting point for negotiations.
Acquisition deal structures have become more dynamic and creative in recent times and sometimes require buyers to take the road less travelled. Our experience of guiding buyers through this process ensures that you get the right structure for the transaction.
There are different ways to structure an acquisition or merger, the three most commonplace are:
- Asset acquisition – structuring a deal as an asset acquisition, the buying company purchases only the assets of the selling company. Ordinarily, the buyer will choose which business assets it wants to acquire, and the seller will receive cash in exchange. This allows the buyer to purchase specific assets, without assuming the risks and liabilities of the selling company. The selling company will continue as a legal entity after the sale and will contain any unsold and remaining assets and liabilities after the acquisition by the buying company.
- Share capital purchase – a deal structured as a share capital purchase involves selling all or a percentage of the shareholding and voting rights of the selling company, effectively transferring control over the assets and liabilities of the existing company over to the buyer.
- Merger – structuring a deal as a merger leads two or more separate businesses coming together to form as one new corporate entity. All the assets and liabilities of the merging entities are consolidated into the newly formed entity. Ordinarily, mergers are agreed to reduce costs through synergies, expand into new markets and territories, and ultimately to increase sales and profitability more as a stand-a-lone entity or group. Often cash is not required for a merger to take place, however voting rights and control is often diluted due to consolidating into a new single structure.
To be as flexible as possible sometimes combining structures will achieve the desired outcome. Fundamentally, the deal structure will decide the price paid by the buyer, the assets exchanged, and the liabilities assumed.
We will assist you in raising the funds to finalise your acquisition. Few companies have liquid assets to complete a cash transaction. We are well connected with numerous funders – both generalist and sector specific.
Regardless of whether a business is fundraising for growth and expansion, or raising their first round of capital, they need to be investment ready. Linked to the valuation of the company, business owners and entrepreneurs need to have a clear understanding of the amount of money they will need to raise, what the investment will be used for and the terms on which capital will be provided to the business.
Fundraising can take many forms, for example:
- secured or unsecured lending,
- mezzanine debt or
- equity investment.
Finding the right type of fundraising at the phase that the business is in, is critical to its future value realisation. Whether the business is in the start-up / growth phase, or well established, having an experienced and trusted advisor is an important part of fundraising process, and will help business achieve the strategic objectives that require the right type of investment. The combination of our contacts and knowledge of fundraising means we are the ideal partner to support your acquisition journey.
The last thing you want when you are about to buy a business is for the deal to go off course. Undertaking due diligence is essential before entering into a proposed transaction with another party. We provide extensive Due Diligence services to our clients, so much so that it required a website section of its own. We map out due diligence here.
