At $3.5 trillion, the global value of mergers and acquisitions (“M&A”) in 2014 reached its highest peak since the crash.
Closer to home, the number of deals completed in North Derbyshire in 2014 rose by around a third with the table below highlighting the top five by disclosed value.
|
Company
|
Activity |
Location |
Transaction |
Deal Value |
|
Unidrug Distribution |
Pharmaceutical distribution |
Alfreton |
Acquisition by Alliance Boots |
£66m |
|
NFT Distribution |
Chilled food distribution |
Alfreton |
Institution buy-out by Emergevest |
£60m |
|
Fusion Group |
Utility infrastructure products and services |
Chesterfield |
Sale of Fusion Provida to Wolseley |
£26m |
|
Servelec Group |
Software developer |
Eckington |
Acquisition of Corelogic |
£23m
|
|
Ideagen |
Software developer |
Matlock |
Acquisition of Gael
|
£18m |
In our experience, this increase in M&A activity reflects a number of factors including improved corporate confidence, better access to funding lines and a backlog of transactions that were put on hold during the downturn.
The result of this is that for many of the businesses we work with the opportunity to grow by acquisition is pushing its way to the top of the boardroom agenda. If executed properly with careful planning, an acquisition can provide a step change in shareholder value for the buyer. Access to new markets, a technology leapfrog, supply chain integration, product and customer diversification are all opportunities that can be accelerated through M&A.
Conversely, acquisitions made in haste with no clear strategic rationale have the potential to seriously erode the value of both the target business and the acquiror.
Based on our extensive experience there are some common factors that underpin successful acquisitions and go a long way to mitigate the risks that will inevitably be present. These include:
- Be “acquisition ready” – is your own organisation capable of handling an acquisition? Have you got robust systems and processes in place? Does your management team have the requisite skill set?
- Lift the drains and kick the tyres – proper due diligence is essential if you are to make a success of the acquisition. Due diligence is about more than just identifying risks, it should challenge the rationale for the acquisition.
- The right financial structure – make sure the financing that funds the acquisition allows for bumps and shocks, both in the target business and in your own.
- Have a plan – the hard work starts once the acquisition has been completed. Make sure you have a well-developed integration plan in place before you complete the deal and monitor progress against this closely.
