Project1_Layout 1 07/05/2013 FINANCE AND BUSINESS
<<< continued from page 22
It’s important to also look out for Crown debt
arrears such as PAYE and VAT. If these exist,
a time to pay arrangement is crucial if a rescue
is to be completed. But buying a failed firm
may mean that existing customers may lack
confidence in the business. Similarly, creditors
who would have suffered due to the business
failure will be wary too.
Acquisitions involve significant cost. Purchasers
should budget for the corporate finance finder’s fee,
accountant’s costs, legal fees (legal drafting, due
diligence and deal completion matters), insurance
warranty payments and costs allied with any
associated funding. These can be over 10% of the
Also, buyers should not ignore property and any
stamp duty that is payable. And just as importantly
is the hidden cost of the Transfer of Undertakings
(Protection of Employment) Regulations 2006
– TUPE – which crystallises if there is a staff
restructure following the takeover.
There’s also the threat of loss of business due
to change of control, changing relationships
and the possible loss of key staff following the
takeover. But these can be managed by having
close liaison with customers and offering staff
revised employment contracts that come with
incentives. Further, existing contracts and
arrangements will need to be honoured once the
former management leaves.
024 MAY 2018 RCIMAG.COM
“An acquisition is not for the faint hearted – acquirers should
consider if they are better off focusing energy on organic
growth or taking a larger risk with an acquisition”
But there is one more expense that is harder to
quantify – time. It is important to make sure that
the acquisition doesn’t become a huge distraction
and the underlying business is not neglected.
An acquisition is not for the faint hearted –
acquirers should consider if they are better off
focusing energy on organic growth or taking a
larger risk with an acquisition. The adage that
“people buy people” applies to staff as much as
it does to the seller and customer relationship.
Ignoring and potential staffing and culture issue
can do more damage than any over-valuation.