Acquisition support… the real hands on kind!

Making an acquisition is an intense process. Gathering information, negotiating the deal, carrying out due diligence, working through the synergies and preparing information for potential funders can all be extremely time consuming. And all this on top of the day job for both the acquiror and the target business. It’s a lot to ask, and no wonder deals often drag on, or get bogged down when no one has time to focus on moving things forward.

Many advisors offer “buyside” support, and it can take many forms, often high level advice helping on deal negotiation or giving a market view. At Forward we offer real hands on help. We act as an extra resource to your team and take control of the time consuming data collection, analysis and modelling required during the acquisition process. Whether you are a business, a private equity investor or a family office it makes a lot of commercial and financial sense to get help. Let’s take a scenario…

You have been in discussions with Company B about acquiring it. Company B is not officially “for sale”, so has done no preparation for the process. It has limited management accounts, has no business plan, and no one has excavated any skeletons or issues – and we all know every business has something that “needs explaining”. As the acquiror, what do you do? You can send in the due diligence team with a very broad (and expensive!) scope to start the dig. You can spend time working with the target team to build the business plan. You can wing it! Or you can get help.

So what does “help” look like?

At Forward our help really involves rolling our sleeves up. Usually in the scenario above, Company B are as keen to get help as you are. They have no idea what is coming, what is needed, and are usually open to working with a third party to help them prepare, even if that party has been selected by their buyer. But importantly, unlike due diligence teams, we are a facilitator rather than a judge. We are there to work with both buyer and seller to facilitate the deal. And our aim is to create the information pack that can help move the project to the next stage.

This pack usually includes:

> Analysis of, or sometimes creation of, management accounts;

> Summary of trends and business drivers;

> Analysis of clients, billing, revenue recognition and recurring quality;

> Identification of key business issues, their materiality, and ongoing impact;

> A financial forecast model, building on the historical analysis to underpin the forecasts in defensible assumptions.
All of this is done alongside the management team of Company B, to ensure buy-in and ownership of the information at all stages.

Worried about fees?

As the buyer, you might worry that this is just another set of advisory fees you need to pay on a deal. But by bringing us in before you start any serious due diligence the benefits should more than pay for themselves:

> This initial analysis may in itself highlight “no go” issues which mean you stop the deal before spending too much money;

> The pack that is produced means the information is ready for the due diligence teams, reducing a lot of the gathering work needed;

> The due diligence can be focused on areas which have been highlighted e.g. revenue recognition, cut-off issues, or working capital;

> And perhaps more importantly you can retain some distance from Company B during that early detailed work, leaving you in the best position to be objective and reduce niggly discussions that may damage relationships down the line.

Acquisitions are a big decision, and they are time consuming. Getting help from professionals who do this all the time can make the process more efficient both from a time and a cost perspective, and make sure that you get started on the right foot from day one.

This is what we do as a day job…

Over the last year we have worked for a number of private equity and corporate clients as hands on buyside support advisors:

Horizon Capital (formerly Lyceum Capital) on acquisition of Wireless Innovation and DMC Canotec

> ECI Partners on acquisition of MThree

> Wireless Innovation on acquisition of Rock7 and YB Tracking

> Make it Cheaper on acquisition of Business Save

> ATG on acquisition of Lot-issimo

> Investis on acquisition of Zog

Look out for a case study coming soon…

Get in touch

If you think we can support you on an acquisition please get in touch.

Sarah Moores
Email: sarah@forwardcf.co.uk

Tel: 0780 961 0401