'Out of adversity comes opportunity' Benjamin Franklin
I never dreamt that in my lifetime I would see so many businesses suddenly come to a halt, the streets of London eerily deserted, and that I would get a seat (or three) on a Monday morning train into London!
COVID-19 has thrown up various challenges for businesses and we are all still coming to terms with what our future, and that of our businesses may look like. Many businesses with cash reserves are nervous about acquiring other businesses whilst private equity companies are awash with cash to spend on acquisitions.
For businesses in selected sectors, plans to grow by acquisition have not be adversely affected and they are continuing with their growth strategy.
As turnover and profitability declines, some businesses will come under pressure to restructure and/or refinance. Almost every business has had to restructure to some degree – be it changing working patterns, renegotiating leases, reducing operating costs etc. Most have introduced changes to become leaner and more efficient.
Previously viable businesses may no longer be feasible standalone businesses so the opportunity to consolidate at attractive prices is higher.
The forced lockdown has made business owners re-evaluate their priorities and lifestyle choices. Some owner managers have enjoyed the enforced ‘retirement’ to the point where they are happy to sell to the right buyer to make their retirement more permanent!
Businesses that are still in a relatively strong position in terms of cash flow and balance sheet need to look beyond the near term uncertainty and plan ahead. The point of maximum uncertainty is often the point of maximum opportunity.
As the uncertainty continues, I suspect there will be more opportunities to buy good quality businesses at affordable prices and the winners will be probably be those buyers who have a plan to acquire, restructure and consolidate businesses to maximise efficiency and profitability.
Alliotts team of experienced Corporate Finance specialists can assist acquirers with all aspects of the acquisition process from initial profiling of a target business, to end stage negotiations, (we can also help with additional areas as required, eg HR matters):
The key areas where we can provide you with assistance and advice include
identifying suitable targets
conducting financial due diligence on target businesses
advice on the acquisition vehicle
tax aspects of an acquisition
tax and accounting warranties and covenants
negotiations with the seller as required
If you would like to speak to us about acquiring a business, or are part way through the process and need help, please do get in touch with me for a discussion in confidence.