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LEGAL VIEW
IN ASSOCIATION WITH:
ASKING THE RIGHT QUESTIONS
Continuing uncertainty fuelled by the ongoing Covid pandemic is leading to a rise in the number of entrepreneurs looking for the exit door, according to market watchers.
M&A activity in the UK is also continuing at a pace, and as we report elsewhere in this edition there have been several high-profile deals in Lancashire in recent months, in sectors ranging from tech to professional services.
Experts say private equity investment continues to be a major influence on the market and as the economy emerges from the pandemic more businesses will begin to review their future strategy.
The sale of a business is likely to be the most important transaction that any owner will make. Proper planning is vital, the experts stress, and that includes taking a close look at areas such as contracts and tax implications.
It is also about asking the right questions to identify potential ‘deal-breakers’, issues that could ultimately deter an acquirer, alongside the ‘value enhancers’ that will create added value through the transaction.
Planning opportunities might include ‘locking in’ and incentivising key staff, change of control clauses in any contracts and the longevity of any contractual arrangements.
It is also important to resolve any shareholder issues and deal with any lack of, or poorly drafted, employment contracts.
Lisa Kennery, director at Blackburn-based business advisory and accountancy practice Pierce, says that when it comes to owners looking at a possible sale: “It is our experience that proper planning at the appropriate time will result in business value being maximised.
a transaction is minimised. It will allow you to extract any non-trading assets in the most tax efficient way.”
Stephen Gregson, corporate finance director at MHA Moore and Smalley, also emphasises that sale success is about “asking the right questions”.
He adds: “Whether you’re preparing to buy or sell a business, arguably the most important factor to success is sound long-term planning. The whole process needs to be an active and dynamic one and preparations should begin long before any deal begins to be negotiated.
“If you’re selling a business, it’s also crucial to have invested in the critical infrastructure of that business and specifically your financial control and reporting processes.
Stephen Gregson
“Alongside maximising value, the planning will allow your advisor to ensure that tax arising on
“Many business leaders see the finance function as a necessary evil, but you need to have solid, reliable, and timely financial information to enable you to clearly communicate the profitability and hence value of the business.
“But this isn’t just about looking into the past, it also applies to financial projections. The best run businesses will tend to have these already and they are sophisticated enough
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