BTC Group is a promotional merchandise company based in the UK who, through their experience and extensive knowledge, assist their customers in creating marketing solutions. The discussion can be loosely broken down into three core themes; communication, translation and negotiation.
Frequent, open and honest communication is of particular importance in M&A transactions, especially when there are many shareholders who may have different ideas of what a successful transaction looks like. Advisory firms have to be able to effectively communicate key developments to all stakeholders, making them aware of all of the possible options. Sound working relationships between advisors and clients are ultimately built on the pillars of trust and communication. In the case of this transaction, an expedited timeline was set which was achievable however, there were third parties involved such as the bank and the landlord. Third party involvement in a transaction can cause delays as they often have no vested interest in achieving a smooth and swift transaction. As such, it required persistence by Buzzacott in order to keep the third parties moving towards a successful transaction.
Deciding when to tell staff, and in this case suppliers due to it being a trade and assets sale, can be difficult. The textbook says that you shouldn’t do this until the transaction completes as you do not want to jeopardise relationships if the deal falls over. However, BTC decided to tell both the staff and suppliers prior to the transaction completing. Geiger announcing the acquisition publically prior to completion helped ease concerns and reduce the risk of the transaction falling over.
With Geiger being a U.S. Corporation, there was the issue of differing accounting standards and policies. Buzzacott have been acting for both sides on a significant number of these US/UK transactions and therefore had the experience to clarify any differences to both BTC and Geiger. Having an experienced advisor on hand to help translate the financial terminology took a way a great deal of stress.
In addition, having an advisor explain complex legal terminology, in order to ensure BTC had a clear understanding of Geiger’s intentions, helped eliminate any potential ambiguities.
Negotiating a price can often be the hardest and most stressful part of a transaction. One of the key decisions is whether to, as the seller, state a price or wait for the buyer’s first offer. If the seller chooses to go first they must be aware that 99% of the time that will be the most they will get for their business. However, this can help set the price level if you expect there may be a gap between what the seller wants and what the buyer wants to pay.
As Philip pointed out during the event, when considering selling your business it is likely that you will know the top five people who will acquire you. Therefore, meeting those people for an informal coffee or lunch and planting the seed that you may consider selling in the not too distant future is a great idea. You never know whether they are considering making acquisitions but had never considered your business.