MERGER

WORKING ON A MERGER

A company had been successful for many years and knew its competitors well.  The owner of one of these had retired and now wanted to sell up.  There were many reasons why a merger of the two businesses would make good sense, if the details could be resolved to everyone’s satisfaction.

When you run a small company it is very hard to take on a significant external project and “do the day job”, particularly if you want to keep the work secret.  We were approached by the directors to provide some additional resource, as a financial expert and also as a sounding board.

The other company had also appointed an interim finance resource, so we collaborated to produce forecasts of the businesses both separately and combined.  This led to probing questions about some of the forecast assumptions and key risks.  The detailed current financial information showed that the other party was not as financially strong as had been expected, and further cashflow modelling was needed to understand key risks and sensitivities.

We supported the directors in the price negotiations, agreement of “heads of terms” and the subsequent preparations of legal documentation.  We attempted to agree the “future vision” in the legal documents and to define how management responsibilities would be allocated in the new merged entity.

Eventually our client decided that the risks in the merger were not acceptable and chose to “walk away” from the merger.  You might be surprised how many deals end up like this.

2017-11-07T13:19:07+00:00