BUSINESS MATTERS
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M&A in focus LEGAL AID T
eacher Stern will continue to assist Comms Dealer readers during the
MBY MARCUS ALLCHURCH, TELECOMS M&A MSPECIALIST AT BDO CORPORATE FINANCE
D
ecember was another strong month in terms
of M&A activity in the channel. At Comms Vision in November we were struck by the focus of a large number of attendees on the topic of exit, and Daisy’s acquisition of NEG for £23.5 million continued to validate our view that now is a great time to consider a sale.
More broadly, Accumuli, the AIM listed business led by Ian Smith, Executive Chairman of Redstone PLC, has recently acquired Tuscany Networks, which designs, installs and manages core network services and provides sophisticated DNS and IP address solutions for around 200 large organisations, and then Fujin Group, a security systems integration specialist.
How long can this activity continue, and can we expect to see the same level of deal activity in 2011? The answer has to be a resounding ‘yes’. The recent BDO Private Equity survey concluded that 98 per cent of private equity managers see 2011 as a good time to invest. This is backed up by what we
are seeing here in terms of deal-flow. There are now a number of private equity backed businesses in the sector looking for targets to acquire, and the pressure to drive growth and profitability will inevitably lead to further consolidation.
At the upper end, we believe that in early 2011 the European telcos are likely to acquire by exception rather than as part of a broader acquisition strategy. That said we suspect there may be interest from telcos based further afield, such as India or the Far East. This view is supported by NTT which recently completed its acquisition of Dimension Data, and which is rumoured to be looking at other UK and European opportunities.
These strands, when taken together, mean that businesses targeting aggressive growth before a large trade sale in 2012 should spend much of 2011 acquiring to build scale and extract synergies. By implication, for those at the smaller end of the spectrum, the coming year should be full of opportunities to crystallise value.
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coming year in recognising and understanding some of the commercial and legal issues that they may face. It is always preferable to recognise issues before they become a problem, and with this in mind we are going to focus on key legislative, contractual and enforcement issues over the next few months, and then turn our attention to employment issues which are relevant to the channel.
The Bribery Act 2011 A hot topic for 2011 is The Bribery Act 2010 which is expected to be brought into force in April 2011. We are receiving many calls from clients who want to understand the reach and implications of the new framework for their business. With this in mind, we detail below a very brief overview of the Act so that you can assess whether this is an area that you may have exposure on, and consequently what steps you should be taking to minimise such risk.
The Act extends the crime of bribery to cover all private sector transactions (previously bribery offences were confined to transactions involving public officials and agents). It creates a new strict liability offence of failing to prevent bribery. An organisation will only have a defence to this offence if it can show it had ‘adequate procedures’ in place to prevent bribery. Its scope is extensive. The offences are broadly defined and
Martine Nathan
it has significant extra- territorial reach. The offences contained in the Act carry criminal penalties for individuals and organisations.
For individuals, a maximum prison sentence of ten years and/or an unlimited fine can be imposed. For companies, an unlimited fine can be imposed. Anti- corruption procedures must be created and/or reviewed to ensure that they are sufficiently robust to prevent corruption and to minimise the risk of committing an offence under the Act.
The Act creates four offences: • A general offence covering offering, promising or giving a bribe. • A general offence covering requesting, agreeing to receive or accepting a bribe. • A distinct offence of bribing a foreign public official to obtain or retain business. • A new strict liability offence for commercial organisations where they fail to prevent bribery by those acting on their behalf.
BY MARTINE NATHAN, PARTNER AT TEACHER STERN SOLICITORS
A commercial organisation commits an offence if a person associated with it bribes another person for that organisation’s benefit. A person is ‘associated’ with a commercial organisation if it performs services for or on behalf of the organisation, regardless of the capacity in which they do so. This will therefore be construed broadly and could cover your agents, employees, subsidiaries, intermediaries, joint venture partners and suppliers, all of whom could render your organisation guilty of this offence. This is a strict liability offence, there is no need to prove negligence or the involvement and guilt of the ‘directing mind and will’ of the organisation. This makes the offence easier to prove and will probably lead to more corporate prosecutions and convictions.
What you can do now Take steps to ensure that adequate procedures will be in place. Larger companies may already have ethics and compliance policies but smaller companies may have to consider introducing new
procedures. Also, start a risk assessment of your business. Consider the nature and extent of the risks to which your organisation is exposed. What territories does your organisation operate in? Certain countries present a greater risk as employees are more likely to engage in bribery in these areas.
For more guidance on the above or any other issues of concern, contact
m.nathan@
teacherstern.com
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30 COMMS DEALER JANUARY 2011
www.comms-dealer.com
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