mergers & acquisitions 27


For the best price a business needs the best advice


A sale process is far more complicated than many sellers envisage, resulting in many processes failing to complete or businesses selling for less than their potential value, says Joe Jeffers, associate partner, Meridian Corporate Finance


Appointing the right CF adviser to guide a seller through the process can ease the strain on the individual and minimise the time spent away from their core business.


A good CF adviser will recognise that a business is greater than the sum of its constituent parts and will work closely with a seller to identify where the business’ strategic premium lies and how to present this in order to achieve the best possible price for the business.


Most companies are not ’sale ready’ at the point when the owners decide to sell. Taking steps to ensure that the company’s financial reporting information, legal and other commercial records will stand up to the rigorous due diligence process is key to avoiding the potential for ’price chipping’ later in the process. Such steps may include:


• Identifying any non-recurring costs (for example R&D expenditure);


• Improving margins by reducing wasted costs;


• Reducing money taken out of the company in the short term and instead investing in growth opportunities;


• Identifying any costs incurred by a seller which would not be incurred under new ownership;


• Scrutinising the company’s assets; and


• Reviewing accounting policies in order to best demonstrate the company’s financial position and potential.


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – SEPTEMBER 2013


Any of the above alterations to financial reporting should be presented carefully and a good CF adviser will be well versed in how best to allay any prospective buyers’ concerns.


Managing the process involved in selling a business is both time consuming and complex and many owners will only go through this process once. A CF adviser will walk a seller through the due diligence process and warranties, project manage the accounting, tax and legal input and ensure any hidden skeletons are identified early in a process to avoid giving a buyer any ammunition to price chip.


Meridian has a strong track record of helping owners to prepare and market their businesses for sale, with an enviable completion rate of 87% on all company disposals in the past 10 years compared with an industry standard of closer to 40%.


Recognised as the region’s leading corporate finance team, Meridian is also the proud winner of multiple awards at The Business Magazine’s Solent Deals Awards in June this year.


Details: Joe Jeffers 0844-225-8800 joe.jeffers@meridiancf.com www.meridiancf.com


Invoice financing – facilitating mergers and


acquisitions As an expert player in the Solent’s active turnaround and recovery markets, Pulse Cashflow Finance understands the positive effect invoice financing can have on a distressed business that’s the target of a merger or acquisition. Here, Tracey Bevis, senior new business manager at Pulse, explains this relationship and shows how an injection of invoice finance into an ailing business can oil the wheels of recovery and facilitate a successful merger or acquisition


Pulse Cashflow Finance is often approached by acquisition- hungry investors or corporate financiers to assist in the debt financing of a target business. This is generally a straightforward process, with Pulse providing the gearing on the assets as part of a structured plan to generate cash for outgoing shareholders.


However, there are times when Pulse is approached by parties advising or acquiring distressed businesses, which need a complement of investors and funders to inject cash to prevent a business failure. In these scenarios, we often work with a number of assorted funders to assist in the complete merger acquisition funding package, focusing our attention solely on the debt element of the deal.


We prefer to concentrate our expertise on putting invoice financing in place to provide the target business with sufficient breathing space for the necessary negotiations to take place, without the headache of incumbent lenders or creditors breathing down their necks.


And because we are able to achieve this in a matter of just a few days, it’s a formula that has proven success across the region, as was the case recently when Pulse was approached by a distressed manufacturer seeking a funding partner and equity investor to work with them to stabilise and grow the business. An investor was found that was attracted to the possibility of owning a manufacturer that complemented their existing businesses, utilising products from its operations within the manufacturing process and, five days later, Pulse was able to put


in place a £500,000 financing package that prevented the manufacturer going bust and facilitated the change of ownership.


The investor took Pulse on side to refinance the company’s existing invoice finance facility and provide additional funding and management expertise that not only facilitated the change of ownership but also helped to put the company on a stable footing. Today, the business is able to continue trading profitably, has successfully renegotiated its position with HMRC and has the benefit of being part of a larger trading group.


It’s safe to say that invoice financing played an integral role in this particular acquisition and this scenario is by no means unique.


Details: Tracey Bevis 0845-539-7003 enquiries@pulse cashflowfinance.com


www.businessmag.co.uk


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