With much speculation concerning liquidations and exit strategies in business, it’s important to gain a perspective from the businesses whose role it is to focus on these happenings.
Selling, merging and acquiring businesses is a huge industry within itself. According to the ONS, the annual values of mergers and acquisitions (M&A) increased for all three types of deals (inward, outward and domestic) in 2021 compared with 2020. The increase from UK companies acquiring foreign companies (outward) went from £15.5 billion to £46.0 billion (£30.5 billion higher).
This highlights that over the past year, the acquiring and merging of businesses is on a rapid rise, despite the turmoil and trials of the pandemic. With the cost of living crisis now in full flow, more and more businesses are expected to undergo this treatment and continue the upward trajectory of merging and acquiring.
We spoke to Transworld’s Business Development & Partnerships Director, Gabriela Rogati-Pinches, about her experience in business, the most common complications when acquiring and merging businesses, as well as the role that accountants play in the process…
Firstly, tell us a bit about yourself & your history in business?
Having always been part of my family’s business from a young age, my journey continued with studying Economics in high school/university and then at master’s level. Sales & Business Development became my passion and I have worked with several companies over the years in different industries. I’ve always been a connector, a professional matchmaker or like a ‘human google’ as one of my clients called me! My work with Transworld started 18 months ago and has flourished, we are currently listing around 30-40 companies to sell or available for investment opportunities, and we are in conversations with another 60 for Q3 & Q4 of this year already.
Who is Transworld and what is your role within the firm?
Transworld is an international network of 450 business brokers with 15 offices in the UK. Transworld assists business owners with free valuations and no upfront fees when they sign up to sell – the only fees we charge are upon completion – this is a key unique selling point that sets us apart from our competitors. I work with Transworld as their Business Development & Partnerships Director facilitating high level introductions & developing our network of trusted collaborators such as accountants, financial advisors, solicitors, business advisors & coaches.
Selling, merging & acquiring businesses is seen as a huge industry within itself. Has this slowed down or increased during the past few years with the pandemic?
Our industry has been extremely active, and the pandemic has definitely not slowed this down, if anything it’s the opposite. Many business owners have been actively looking to sell their business earlier than initial plans, due to now planning an earlier retirement/more time with their families. Buyers have been highly engaged as they are seeing the current market as a perfect one to get involved with in order to grow through acquisitions.
What are some of the most common complications that arise when a firm chooses to merge, sell or acquire another business?
There are a few issues that the brokers are highly skilled in dealing with and experience is key. Our Managing Director, John Groves, is an ex-accountant and has sold three businesses of his own, so he has first-hand experience when it comes to anticipating and preventing different common complications. A few to name would be having several owners in the business that might not agree on the final terms and conditions, transition terms and settlement; accounting records that are not up to date/management accounts not done monthly or quarterly – this is where partners like Nordens Accountancy can add fantastic value and prepare a business for exit in the most professional and efficient manner; leases/assets/tax avoidance schemes/problems with HMRC could also complicate the process.
How do accountants aid the process of selling or acquiring a business?
Accountants are generally the first go to person supporting business owners with their exit strategy. They have the closest relationship with the business, they know their strengths and are highly invested in helping the business grow/acquire/become more profitable, then sell. Transworld collaborates closely with accountants to offer professional expertise in this process.
Do you think the sale and merger industry is suited solely towards benefitting big corporations and well-established businesses, or does it help in any capacity SMEs and start-up businesses?
Most companies that are selling are SMEs run by entrepreneurs and therefore the buyers that match their profile are also entrepreneurs. These fall into the 1 million EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization) or less category and therefore are generally attractive for other SMEs rather than large corporations. The higher EBITDA businesses will appeal to private equity companies/larger corporations. We support both types of deals successfully through our network.
We hope this has outlined and given you some insight into the merging and acquiring industry in business. If you require any further information on selling, merging or acquiring businesses, then please don’t hesitate to get in contact with us at Nordens where one of our trusted advisors would be happy talking you through your query.