M&A Insights – The importance of continuing business as usual

November 30, 2016

Post the referendum result in the UK, many companies and individuals including Bluebox Corporate Finance thought that this would mean a dry spell for M&A activity in the UK. Although this was in our minds, we maintained business as usual and got all of our clients ready to go to market in September 2016.

Our reasoning with clients was that we wanted to at least be ready to go to market in September and if we thought timing wasn’t right, we could delay until January 2017. The worst case scenario was that we were ready a few months too early. Being prepared in advance sits true with Bluebox’s core offering of pre-sale planning that then leads into a sale of a business.

As September came around, we prepared short reports for each of our clients to highlight the merits and risks of going to market a few short months after the referendum result. This bit of insight was welcomed by clients and emphasised to us, the importance of maintaining an open and continuous dialogue with clients.

With an overwhelming amount of clients convinced of the merits of going to market in September 2016, we started to approach potential acquirers across multiple industries including property and healthcare.

A transaction that I have been personally involved with in the property sector has had significant appetite from both financial and trade acquirers. After the initial approaches were made and meetings held, we ended up with a number of indicative offers. The appetite from both potential acquirers even caught us a little off guard as the property sector has been flagged as one that is in for a bumpy ride post referendum.

The potential acquirers identified our client’s business as one that had an experienced and knowledgeable management team, a defendable position in the market place backed by IP, which was unique to the business. As it turned out, a number of the potential acquirers had their eye on our client’s business for quite a while and were waiting for it to come to market so when the opportunity arose, they were all ready to move forward. Based on the discussions that we had with the potential acquirers, it became evident with some of them that there was a buy or build mentality, i.e. they would look to acquire a business operating in this space or they would do it themselves. Had we waited until January 2017, we may not have had the same interest levels that we have experienced over the past few months, which could have led to shareholder expectations not being met.

To wrap up, it is now clear to Bluebox that planning in advance and maintaining business as usual is critical even in times of clear uncertainty, as you just never know what types of businesses potential acquirers are looking to purchase and on what time frame.

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