Expert View
BRINGING NEW ORGANISATIONS
INTO THE FOLD by Rebecca McCann
Senior associate solicitor, Forbes
Once the excitement of the completion meeting has died down, the next challenge following a merger or acquisition is making the marriage work long term.
Bringing two already distinct businesses together can make a huge difference to your company but it can be tricky to manage. Preparation is key.
Overnight, you could expand your customer base, infrastructure and product line, seeing huge growth for the company. However, with that comes the merge of different work forces, practices, and cultures.
Consideration is also needed in relation to competition law, data protection and foreign markets. It is important to be prepared for how these significant changes could impact the business, for better or for worse, and what you can do to adapt and minimise any interruptions.
Having a team ready to assist with the merge will be crucial. HR support, accounts managers and IT support on the ground will all be key to a successful
no signs of slowing, with Accrington based managed ground transport specialist CMAC Group making two acquisitions as it continues its worldwide growth journey.
The deals support CMAC’s plans to pursue further expansion across Europe and beyond over the next two years.
And it follows a period of continued growth for CMAC Group, with the business reporting a 45 per cent increase in revenue and a seven per cent rise in its headcount in 2021 - a year which saw the firm transport more than two million travellers for the first time.
In the first deal, it bought Barcelona-based Suntransfers for an undisclosed sum in a move designed to bolster its supply chain and provide immediate coverage to its existing clients across 23,000 destinations.
Suntransfers was founded in 2008 and is one of Europe’s largest airport transfer companies, offering travel solutions across more than 750 airports and travel gateways worldwide.
Employing more than 30 industry specialists, the firm manages around 400,000 bookings annually and is on track to exceed its pre-pandemic revenues by the end of this financial year.
CMAC says the “strategic move” provides both organisations with a diversification of services as well as added resilience,
deal, as well as getting the right legal and financial advice from the outset.
Holding on to key employees is essential. As part of your due diligence, it is important that you identify these key individuals and consider any retention risks and what the impact may be on the rest of the workforce post-completion if they are not retained. Harmonisation of employment contracts should also be a key consideration.
IT is also critical and its importance should not be underestimated. If steps are not put in place pre-completion to transfer servers and systems, large parts of your newly acquired business could be offline immediately, causing disruption to not only your business but also your customers’ businesses.
The successful integration of a business to your existing business can be risky, costly and take time but with the right planning and considerations pre- and post-completion, it can add significant value to your company. Developing a clear synergy integration strategy from the outset is essential.
delivering a combined turnover of £120m-plus and a total headcount of more than 270 staff, based across eight offices.
Peter Slater, CMAC chief executive, says: “The acquisition will facilitate powerful new developments for both businesses and together we will continue building a stronger presence internationally whilst providing a wider range of market leading services focused on client service excellence.”
CMAC followed that deal with the acquisition of Portuguese-based travel firm Here & Dare, bolstering the group’s supply chain across the country.
With more than 30 years of industry experience, combined with a network of 500-plus vehicles, CMAC’s newly expanded team in Portugal is available round the clock to deliver a “seamless travel” experience for clients, their customers and their staff.
Peter says: “We firmly believe that employing experienced people is the key to successfully managing complex and demanding transportation and accommodation requirements, such as mass disruption. This cannot be fulfilled solely with a tech-only solution.
“By enhancing our presence in key markets, we can further our commitment to being the partner of choice for managed ground transport and accommodation across the globe.”
LANCASHIREBUSINESSVIEW.CO.UK
Steve Bell Corporate finance director
@pcaltd pierce-c.-a.-limited @PierceCA
PLAN FOR SUCCESSION WITH AN EOT
Employee Ownership Trusts (EOTs) were introduced by the government in 2014 to provide a tax efficient structure for the sale of a controlling interest in a trading company to its employees.
The flexibility and tax advantages of EOTs have helped them gain traction as an exit strategy in recent years, especially given the current economic outlook.
Using EOTs for succession planning can allow the owner of a business to pass on the company to its employees for full market value without incurring a CGT charge. This method of sale can provide an alternative to external sales, management buy- outs or private equity backed buy-outs.
The advantages of using a qualifying EOT for succession planning are as follows:
• an immediate purchaser for the trading company.
• no capital gains tax on the vendors
• enables succession in family companies where nobody in the family wants to continue the business
• encourages employees to take a more active and constructive interest in the business
• flexibility for current shareholders to sell all or some of their shares (subject to limits required by the controlling interest and limited participation requirements)
• current owners can remain as directors and receive market rate remuneration
• companies owned by EOTs can pay tax-free bonuses to their employees of up to £3,600, although NIC still remains payable
An incorrectly structured sale to an EOT can have adverse and unexpected tax consequences, therefore it is important to seek professional advice from an advisor with previous experience setting up EOTs before proceeding.
If you would like further information on Employee Ownership Trusts, please do not hesitate to contact the Pierce Corporate Finance Team.
For more information please visit
www.pierce.co.uk
or call 01254 688100
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DEALMAKERS
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