M&A appetite is still strong…

Despite the risks and uncertainty presented by Brexit, M&A for SMEs in the UK and Europe remains active.

According to a recent report by Pitchbook, European M&A logged its sixth straight year completing more than $1.0 trillion in total deal value in 2018, with average deal multiples higher than they have been in over 10 years.

The UK economy is one of the world leaders in M&A, and despite Brexit, will continue to be so. There remains a significant amount of cash for UK mid-market financial investors to invest in good quality businesses, whilst strategic international investors are looking to get into the UK whilst the pound is so cheap, and to diversify their international exposure.

We are seeing a number of leading UK businesses also looking to grow, and growing through acquisition presents a quicker, easier and more efficient way to enhance their top and bottom line than pumping cash into organic growth. Every business has a ‘make vs. buy’ decision when considering an acquisition or investment, and therefore when you are selling your business, or looking for investment, presenting the barriers to entry that you have developed, is critical to ensure that the only solution for investors or acquirers is to buy.

Gerald Edelman are delighted to announce that we now offer clients services across the entire deal cycle under the umbrella of Gerald Edelman’s ‘Deal Advisory’ division*. We work with shareholders thinking about selling their business and companies looking to acquire, all the way through to providing business valuation, modelling, tax advisory and due diligence support.

The focus of our work for all clients is on successful outcomes and therefore planning to enhance deliverability and value is critical. So many deals in our market fall through because of issues that come up during the ever more stringent due diligence process, so removing ‘skeletons in the closet’ (such as historical tax, intellectual property, contract or employment issues) in advance of an exercise is absolutely critical to ensuring a business gets through due diligence without a price chip, or even the deal falling through.

Equally as important is the presentation of the business to potential investors or acquirers, including demonstrating the barriers to entry that I mentioned earlier, as well as the opportunities for growth. Very few buyers or investors want to buy or invest in a declining or flatlining business, so it is critical to present credible opportunities for growth.

The team at Gerald Edelman has significant experience in advising on transactions across a wide range of sectors, including leisure, transport, healthcare and business services to name a few, and also dealing with cross-border deals which, as mentioned, are becoming more and more common.

Please get in touch if you are thinking about selling your business, succession planning, raising funds for growth, or looking to grow through acquisition.