24 corporate acquisitions & disposals
The ins and outs of business acquisitions
Business acquisitions have hit the headlines since the announcement of Burger King’s plans to acquire the Canadian coffee-and-doughnut chain, Tim Hortons Inc. Emma Ladd, associate in the corporate and commercial team at Gardner Leader solicitors lends advice on the ins and outs of business acquisitions
It’s a deal of substantial size – $11 billion – but regardless of the value of the transaction or the size of the businesses involved, there are certain steps which are common to all successful acquisitions.
Plan and prepare
Whether you’re being acquired or acquiring another business, it’s important to establish in advance what you need from the transaction and what points are non-negotiable. Share these with your advisers so they can advise on the strategy and try and find a win-win structure based on what the other party wants also.
Don’t try to reinvent the wheel or be too clever with the structure of the acquisition, as this may just end up generating unnecessary fees. Your advisers are experienced in these matters, so let them guide you. Taking tax advice early is particularly important, as the tax position can have an impact on the structure of the deal and it is difficult to renegotiate the structure once the process has begun.
If you are selling, start gathering information early. It is not a simple process, so don’t be tempted to cut corners to limit costs, as this may end up being a false economy.
CRM specialist Excitation acquired by Core
Microsoft multiple gold partner Core has announced the acquisition of Oxford-based CRM specialist Excitation in a seven-figure deal.
Core CEO Conor Callanan said: “Excitation is an outstanding company. Its CRM expertise rounds out our full cloud offering by providing CRM both on premise and online, and aligns Core with the Microsoft strategy of mainstreaming CRM, announced at WPC this year. This will consolidate Core’s position as the leading Microsoft gold partner in the UK.
“The acquisition makes Core a platform partner in the UK, and we are now a single source for Microsoft’s on-premise and online services which Microsoft has hailed as virtually unique.”
Callanan is not ruling out further acquisitions in the future. “There is ongoing consolidation within the Microsoft partnership space, as customers increasingly move towards full cloud partners and away from specialist
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boutiques. We’re always looking for opportunities to expand the breadth and quality of our services.”
Having recently expanded its London offices, Core plans to maximise use of the 4,000 sq ft Oxfordshire premises where the 14-person Excitation team will continue to operate.
Callanan has welcomed the principals from Excitation: Mark Dendy, CEO of Excitation, who will join the Core board as CRM director and David Jennaway, who will become head CRM architect. “David is the UK’s longest-standing CRM MVP and the first of key MVPs we plan to add to our cloud teams,” he said.
Dendy said: “Having enjoyed gold partner status in our own right, we’re looking forward to introducing our clients to a new pool of expertise, and to being part of a fast-growing and highly- regarded Microsoft multi-platform partner.”
Structure of the transaction
All acquisitions follow a certain process, which normally starts with Heads of Terms (also known as a Letter of Intent). This non-legally binding document sets out the headline points of the deal so any points of principal can be resolved at the early stages.
The purchaser will send questions about the business, covering everything from financial information to employee details. The seller then replies to these enquiries, which will normally highlight any major issues with the business.
A main purchase agreement will then be drawn up. This is a legally binding contract which implements the Heads of Terms and normally includes a list of warranties (promises about the state of the business). Other documents will be negotiated at this time such as a tax covenant or releases of any finance.
If there are any dates by which completion has to happen, then be sure to agree these as far ahead as possible. Communicating these to all parties ensures that people’s expectations are managed and that everyone is pulling in the same direction.
Following these steps before undertaking an acquisition will minimise the risk of issues arising and ensure a smooth exchange and completion.
Details: 01635-508080
www.gardner-leader.co.uk
Wentworth Golf Club acquired
by Reignwood Investments looked for an owner with integrity, a recognition of the iconic nature of Wentworth, an understanding of the special place it keeps in so many people’s hearts – an owner who wants to develop the club ever further, improving on what is already a masterpiece, someone with knowledge and experience of the sport and with premium quality international connections and, last but not least, long-term vision.
Reignwood Group has announced the acquisition, by Reignwood Investments, of Wentworth Club from Richard Caring’s WG Acquisition for a total consideration of £135 million.
Dr Chanchai Ruayrungruang, who founded the Reignwood Group in 1984, commented: “Reignwood has a long history in golf development, a profound respect for excellence in every form and deep interest in East- West cooperation.
“As a world-famous golf institution, Wentworth is a key strategic acquisition for our rapidly-growing luxury lifestyle division, whose unique culture we are dedicated to preserving and whose exceptional expertise will inform our golf operations across Asia.”
Caring commented: “In the nine years that I have owned Wentworth, I have received a multitude of offers to purchase the club. However, I have always
“In Dr Chanchai and his team at Reignwood, I feel confident that this has been achieved. I know Wentworth is in great hands for the next chapter in its amazing story and I look forward to staying on as non-executive director.”
Reignwood Investments continues to seek strategic acquisitions in Europe as part of its international development plan.
KPMG assisted in the transaction as the lead adviser.
THE BUSINESS MAGAZINE – THAMES VALLEY – OCTOBER 2014
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