by Alyson Howard business development consultant, Corporate Team, Brachers LLP

While it is certainly true that the volume of sales, mergers and acquisitions happening across Kent are fewer than they were during the boom years, there is some interesting activity. But, creative ideas and thoughtful planning are very much the bywords for getting deals done right now.

The days of highly geared debt funded MBOs and acquisitions are certainly no more, and it will be quite some time before they return, if ever, to the crazy levels of some in the past. But, deals are being done, it is just the debt proportion is much smaller, and that of course can be a great benefit to the ongoing business in not having a large millstone around the neck in terms of capital and interest repayments.

The disadvantage, however, is that the cost of getting even these lowly leveraged deals done is much higher as cautious banks set a far higher financial and legal due diligence exercise burden. And they also take far longer to complete.

We are seeing a much higher number of shareholder disputes coming into the firm, with the subsequent change of control in the companies that ensues.
In hard times many business partners find themselves no longer agreeing on how to take things forward.

If you have a strong shareholders agreement in place, you can minimise some of the negative impact of this process, but if not legal proceedings can take a lot of time and energy away from the business.

There has never been a more important time to ensure that you do have a strong shareholders agreement in place, maybe to help in the event of a dispute, but also to set out the basis for all of the shareholders eventual exit from the business

But, those businesses with strong balance sheet of their own and access to cash are best placed to take up the many and various opportunities that abound in the market place right now. There are those businesses for sale where the vendor has simply left their succession planning far too late, and they are not able to continue in the business they have built any longer, despite the difficulties in realising shareholder value at the moment.

There are still others which are struggling due to their own limited cash resources, and there are others that may even have tipped over into some form of an insolvency procedure. All of these businesses are going to be available at much lower prices than they would otherwise have been, and so the well set up acquirer will be able to make lots of hay, despite the lack of sunshine!

There is a lesson in all of this. It is never too early to start your succession planning in your business, just because you will perhaps not be selling this year does not mean that you should not be making sure that your business is robust enough to withstand full legal and financial due diligence, as well as making sure you are building the right management team.