Get your A Team in place!

Howes Percival

1st October 2019

Buying & Selling A Business

Howes Percival

By Matthew Thompson

Howes Percival

DESPITE the continued uncertainty surrounding the UK's vote to leave the European Union, the Northamptonshire economy continues to see a whole range of corporate deal activity - whether it be bolt-on acquisitions, cross jurisdictional disposals, management buyouts, or sales to private equity - the Northampton Corporate team at Howes Percival have seen it all in the last 12 months!

Those with entrepreneurial spirit continue to seek out further opportunities to grow their businesses via acquisitions. Sometimes, an acquisition can be used to add additional sites to a company's portfolio to help growth plans. An acquisition can also be used to add additional skill sets to a workforce. In some circumstances, it could also be a long-term cost saving solution by acquiring and bringing in-house a function that has historically been outsourced by the business.

However, if you have never acquired a business, or you want to make sure it's as smooth a process as possible, it's important to ensure you have the right team of advisers in place right from the outset to help you through the process:

1. The Funder - firstly, how are you going to fund the acquisition? Has your business got cash sat in the bank not earning a high level of interest, and could that to work better for you as an acquisition investment? Or do you need to approach a lender to provide acquisition finance, or some form of invoice discounting facility for the new business? Speak to your bankers/lenders early if you need funding, so that they can advise you right from the outset about what they can and can't fund, and what security you might need to give.

2. The Tax Adviser - is the acquisition going to be an asset or a share purchase? Whilst a share sale is often simpler for the ongoing running of the business, an asset sale can often allow the buyer to be able to cherry pick the assets it requires from the business, without taking on all of the liabilities. Structuring the transaction in a tax efficient manner is important and it is a good idea to speak with your accountants/tax advisers as early as possible to help you minimise or save tax on your acquisition.

3. The Corporate Financier - depending on the structure chosen, it is important to agree with the seller at the outset how you are valuing the shares or assets being purchased. A good corporate financier can also help you get additional value out of the business, whether that is via a reduced price for an acquisition (because the seller has overvalued the business), or by structuring a transaction with maybe an earn-out element which can help fund part of the purchase from future profits or sales of the target business.

4. The Corporate Lawyer - The lawyer's role helps pull all of the above together and helps to document the transaction. As an important cog in the acquisition wheel, a corporate lawyer will help review the due diligence in relation to your proposed acquisition, will negotiate your purchase contract and will ensure that the buyer has adequate protections in place should any issues arise after completion. Ultimately, a good corporate lawyer will help to project manage your deal right from early instruction to signing on the dotted line.

Picking your perfect team is crucial to your success, and the whole team need to be in place before you even agree headline terms of the deal! For further information about how Howes Percival can assist being part of your dream team of advisers on any corporate transaction, contact Matt Thompson on 01604 230400 or by email at matthew.thompson@howespercival.com

Howes Percival