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Why is M&A like the London Underground?

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I love London. We are regular visitors to Marble Arch where we host seminars, and the Institute of Directors in Pall Mall, which is a great place to meet clients. In fact I was there last week meeting with an exciting new client.

Often the default position for visitors to London is to get the tube, and I understand why. It’s familiar, it’s relatively easy to navigate and it’s (largely) reliable. But the way the map is designed it can deceive the uninitiated into walking miles further than they need to.

Navigating through a company sale can be just as confusing as getting from A to B in London. Many people often go for what seems to be the most direct option. Take the journey I did yesterday for example; you could take the Northern line from Waterloo to Charing Cross. It looks reasonable on the map, but in reality it’s less than half a mile, and a much nicer walk – taking in the South Bank Centre, London Eye, Big Ben and the mighty river Thames. And I often wonder if you don’t actually walk the same distance in negotiating the tunnels and passageways of the underground stations anyway.

Experience always helps. Because I have been to the IOD several times, I know the options that are available to me so I take whichever route suits my needs at the time. Just like M&A, if you’ve never sold a company before, the landscape can look intimidating; the most obvious route – sell to a competitor – can seem to be your only option. But in reality, there are many different routes, and which you choose will depend on your business and what you want to achieve.

For example, our most common deal type is a trade sale – i.e. to another business, not competing with yours but complementing your products and services. This is most common because it is most likely to achieve the maximum sale price and allow our clients to exit the business, the most common desired outcome. That said, we have also negotiated many other types of deal over the last few years, including Private Equity investment, trade sale to a competitor, MBOs, MBIs, BIMBOs and even a VIAMBO. And there are many other variations.

If you don’t understand some of those terms, and there is no reason you should, don’t worry. An experienced advisor, like BCMS, will be able to assess your business and your desired outcome, and discuss your options for getting from A to B.

Dave Rebbettes's picture
Posted Sep 2015
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