Mergers and acquisitions
Assess the target business for a merger or acquisition
If you are considering a merger or acquisition, you should assess your target business. Talk to those who regularly interact with it - the customers and suppliers.
Consider asking customers about:
- the business' products or services
- the comparison with competitors in terms of payments
- who their main contacts are
- how much their relationship with the business relies on dealing with the owner
Ask your target business for:
- financial information. If you have to rely on unaudited financial accounts, get warranties from the seller.
- details about their customer base
- trends in sales and profit margins
- future forecasts - consider whether forecasts are realistic and tally with your knowledge of the market and its prospects
- stock levels and debt collection trends, investments and the business' debts
- information about its marketing
- information about key employees and their plans - in particular, the extent of the involvement of the owner
- information about its systems, suppliers and legal and contract issues
How the Data Protection Act affects business buyers and sellers
The Data Protection Act applies to anyone holding information about living individuals from which they can be identified, or information that expresses an opinion about an individual such as appraisal forms. This can include both electronic and paper formats. Sensitive personal data includes information about sexuality, race, religion, politics, criminal record etc.
Without the consent of a target business you should confine your information gathering to generic data that cannot be linked to an individual. With the consent of the target business you have more scope, but the target business will need the data subject's permission - if the data subject can be identified from the information - before the information can be passed on to you.
Businesses can amend their data protection notices, contracts and employment contracts to address transferring personal data for the purposes of a corporate sale or restructure.
What the industry expert can do
You can carry out much of the assessment of your target company yourself, but you will find it invaluable to get some advice from an industry expert.
Ask their views on:
- market conditions and changes
- factors affecting market prices and margins
- the business' outlook and health
- others in the market