Here are a few points to consider if you’re thinking about growing your business through mergers and acquisitions.
- Let people know you’re looking for opportunities - consider speaking to your trusted advisers to let them know your plans. Good advisers will seek out opportunities for you if they know what you’re looking for.
- Advisers – get your advisers in place early. Talk through with your advisers your commercial drivers for the deal and where you see the risks. Engaging fully and early with advisers will help create a good process and result in an efficient and effective process for you.
- Do your due diligence – as lawyers we can provide fantastic contractual protection for you in a sale agreement, but you don’t want to be making claims after you have completed and chasing recovery of consideration paid. Make sure you do full due diligence (financial, commercial, tax and legal as a minimum and consider insurance and IT too as well as any other areas which are specific to your target business).
- Conditionality? – consider whether there are any conditions which need to be (or you want to be) satisfied before you can complete e.g. change of control clauses in key contracts. Consider merger control/competition issues and seek advice on whether these are relevant to your purchase – most merger control/ competition clearances are a buyer requirement so the risk will fall on you if these are not fully considered.
- Testing value – consider how best to ensure that you’re buying what you think you are. Do you need completion accounts to be prepared and tested? Will a “locked box” approach be sufficient to ensure that value has not been leaked from the business? Do you want any of the consideration to be deferred or contingent on key milestones/targets being achieved?
- Integration – crucially, prepare your integration plan thoroughly before you have acquired your target business. Know what needs to be done and by which people, in order to maximise the immediate benefit from your acquisition (and use your DD reports to help with this).
This article was first published in Yorkshire Dealmakers Guide, produced by Insider Magazine.