When contemplating acquisitions, there are a number of issues for buyers to consider. The first is usually valuation, and it is important to consider both past and potential future profits, as well as the asset base and any liabilities. The structure of an acquisition must also be addressed at an early stage, as there are very different tax and risk implications associated with a share purchase as opposed to an asset purchase. Buyers should also be alive to the reality that very few transactions take place without an element of deferred consideration or some form of retention, as this is the simplest way to safeguard against any risks or concerns relating to the sustainability of revenue and profits.
Finally, when a deal is agreed it is crucial that you carry out thorough due diligence. We have recently advised on a number of potential acquisitions where, following due diligence, we were left with a very different impression of the opportunity to that which our client had formed in the first instance or what might have been initially perceived from purely market knowledge. It is vitally important to dig deep.
2015 may well turn out to be the best time in a number of years for you to buy another company, but regardless of which side you sit on, seeking advice on deal preparation, deal structuring, valuation, due diligence, tax and legal matters from corporate finance experts is a prerequisite to ensure the best possible outcome.