The more optimistic amongst the business community are rightly aware of the opportunities that difficult economic conditions might offer.  Indeed there is anecdotal evidence of the most durable businesses having been forged during difficult times. While start –ups may face an uphill struggle, some new businesses may be forged by the amalgamation of existing operations and successful mergers may result in new businesses with a combined strength greater than the sum of their constituent parts. An opportunistic acquirer will probably see reduced valuations as the most obvious attraction in the current economic climate.

Price shouldn't be the only consideration and any prudent acquirer should still apply a rigorous approach to diligence, there will inevitably be bargains to be had. While some distressed purchases will make sense purely on valuation, what other opportunities might the current business environment offer to the leftfield thinker?

Perhaps an uncertain future has brought forward an owner/manager’s exit or succession planning, resulting in terms that are attractive not just on price but which would also ensure an orderly handover?

Are there teams of talented individuals within a target business, frustrated by cash constraints, who would be reinvigorated by a merger?

Might there be businesses out there with promising research and development programmes that need a final injection of resource to deliver the full end benefit?

Could a shrewd acquisition, perhaps using deferred consideration, create a new combined entity with revenues that enable it to benefit from the new Enterprise Guarantee Fund loans?

Perhaps if debt capital remains unavailable but equity capital continues to circulate, the technology of one business and the sales of another may make a merged business more attractive to equity investors?

Could a business that has recently gone through a redundancy programme be more attractive than before, not only on cost grounds, but the reduced number of remaining employees and their expectations for the future may mean that integration is made much easier?

Perhaps even a slowing in organic growth simply frees up management time to implement strategic acquisitions?

Can a target be identified which has been left with an increased market share as a result of competitors falling by the wayside?

Finally, and at the risk of professional blasphemy, a canny purchaser might even be able to achieve savings in the total transaction costs involved in implementing an acquisition.

For further information please contact Kenny Mumford on 0131 226 8205
or email kenny.mumford@mbmcommercial.co.uk.