To buy or not to buy
The global M&A (merger and acquisition) market is booming at the moment. Mergermarket, the provider of M&A data and intelligence recently revealed that the first quarter of 2021 saw US$1.16 trillion in transactions, making this year the most active annual opening on record. Large deal values but fewer deals led to the highest average deal value since 2006 of US$518.7 million.
There are a number of factors behind this activity, including pent-up demand following the lockdowns of the past 18 months, with companies set to expand through acquisition putting their activity temporarily on hold. There has also been a revival of confidence with management boards and company owners feeling more optimistic about the economic outlook for 2021.
In addition, some companies have used the lockdown period to reassess where best to put their future focus and allocate capital. This could be in response to both being hit hard by the pandemic or actually thriving and, as a result it could mean that they are now looking to either divest or acquire.
Turning away from the cut and thrust of the global M&A market, the pandemic has certainly given businesses and entrepreneurs a chance to reassess. For some business owners it’s given them the nudge to start thinking about retiring and handing over their company in some way. For others lockdown has encouraged them to become a business owner and rather than starting their own business from scratch, buy an already established business venture. Others have found themselves with money to spend due to changing circumstances over the past 18 months and are looking for a business opportunity.
None of these are decisions which can be made overnight but instead need planning for and certainly some due diligence. This is where our team at Lewis & Co can help. We can provide support to clients with succession planning, as well as with people looking to purchase a business.
When it comes to selling your business, it’s not unlike selling a property. Before putting their house on the market, most people will tidy it up a bit and make it look as attractive as possible. It’s the same with a business.
Quite often succession planning is something we talk to clients for a number of years. They might not be actually putting the business on the market but, instead, want to pass it on to a family member or somebody who is already part of the business. In any case, we are on hand to make sure that the deal is a good one for our client and they achieve their financial goals, that the valuation is the right one and that it makes sense from a tax point of view.
Clients also approach us for our advice when they are looking to buy a business. Sometimes it can look like the perfect opportunity and, very often, it is. But we can be there to check there are no ‘hidden nasties’ and that it is a good deal for our client.
Sometimes a client might walk away from a deal after listening to our advice. We are always very honest and will say if it doesn’t make financial sense, the price doesn’t seem appropriate or the numbers simply don’t stack up.
Whether you are considering buying a venture or selling your business, we are ready to support you. Please do get in touch on: 01892 513515 or email: info@lewisandco.biz