30 corporate finance
Want a successful deal? Watch your ‘P’s and cues
Pounds, percentages, profits and performance are ‘P’s invariably involved in any corporate finance deal but increasingly nowadays the ‘P’s that matter most are preparation, positioning and people
It’s not that all those other ‘P’s don’t get their time in the spotlight, they most definitely do as due diligence is now a major factor in all deals. But, today it’s the mutual trust and belief built up among buyers, sellers, funders and their respective advisers that often overcomes market caution and underpins the activity that gets a deal over the finishing line.
Deals are taking place but fragile confidence and heightened risk awareness are recessionary aftershocks that still linger in the corporate finance market. So, along with making sure that all the ‘P’s’ are properly covered, prospective dealmakers also need to consider strategic timing – to take heed of the cues provided within their target market and by their advisers (preferably proven professionals).
The end result is that deals are tending to take longer nowadays – though a similar number get completed successfully.
At least that was the consensus view of members of BDO’s corporate finance team, based in Reading, when interviewed recently, writes John Burbedge.
Such views are well-worth noting because early last year BDO was highlighted by Experian Corpfin’s ratings as the UK’s most active M&A adviser. BDO’s southern region team also includes partner Paul Russell, honoured as ‘Dealmaker’ and ‘Corporate Finance Adviser of the Year’ at the 2012 Thames Valley and Solent Deals Awards.
Additionally, BDO has recently completed its own successful deal – a smooth ‘jigsaw-fit’ merger with PKF (UK) – that means the combined firm now has 340 people working within the Thames Valley and Solent regions.
John Parkinson, partner in charge of the Reading corporate finance team, pointed out that the additional PKF offices, partners and experienced teams “... probably makes BDO the best regionally represented large accountancy firm in the UK.”
The extra “wealth of PKF knowledge and skills at senior level” also enhances BDO’s business model of high-quality partner-driven teams.
BDO has invested in its regional corporate finance team – director Gareth Davies, M&A specialist, joined BDO last year while Oliver Burton, became a director on the transaction services side. In
www.businessmag.co.uk BDO's corporate finance team
January this year, BDO partner Philipp Prince, part of the firm’s transaction services team and an expert in complex cross-border transactions, joined the regional team from BDO’s London office. BDO’s corporate finance staff in the UK now number more than 200, and are led by 31 partners. BDO itself has become the largest mid- market focused accountancy organisation and operates worldwide in 138 countries.
All these factors are good news for clients says Philipp Prince: “The thing is that people nowadays are hunting globally for growth. That’s an active market driver, particularly among larger corporates, and we are ideally placed to assist them.” (30% of BDO deals had a cross-border flavour to them last year, up from 24% in 2011).
Consequently, the UK, increasingly perceived as a safe ‘bridgehead’ within Europe, is becoming a more vibrant hub for corporate finance involvements, both inward investments and the international activities of UK entities.
That search for global growth has been evidenced by US investments in the UK by PE houses and corporates infilling their commercial requirements through M&A. With ‘Made in Britain’ branding riding high, cash-rich Asian, Middle East and emerging nations have also been flexing their monetary muscle with purchases and investments.
Meanwhile, UK companies are increasingly looking outwards to fresh international markets, and making astute international alliances and acquisitions to complement their business abilities and aspirations. China is a growth target for many, although China itself appears largely content at present to develop its home markets.
Whatever the nature of the corporate finance activity – buying-selling, re-financing, PE growth funding – the BDO team advises clients to expect
THE BUSINESS MAGAZINE – THAMES VALLEY – JUNE 2013
to get more personally involved, and to focus on carefully compiled and well-presented company details.
Gareth Davies added: “Every investment decision gets questioned in a lot more detail than it used to, so it’s very important that every aspect is adequately covered, since no stone will be left unturned. Buyers and funders will be looking closely at the underlying organic story; sellers need to be on the front foot at all times.”
John Parkinson remarked that no business sector appears immune to the longer duration of deals – even the most active such as IT, telecoms, healthcare and pharmaceutical. People are more attuned to the costly risks, both financial and reputational, should deals go awry.
Helping to speed up the transaction process, vendor due diligence is now becoming far more common, particularly in PE involvement, explained Oliver Burton. “It can seem costly upfront on a deal but helps avoid early surprises, and typically results in a more efficient process.”
Prince remarked: “It may be that in years to come due diligence processes will be streamlined through IT and delivered more cost-effectively, but we have to accept that in-depth investigation is currently part of the new norm within the corporate finance world.”
Details: BDO corporate finance team, Reading 0118-9527312
john.parkinson@
bdo.co.uk
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