Archives for August 2014

Planning a business acquisition

The series of articles entitled ‘Planning a business acquisition’ was written by Malcolm Burrows and has been licensed to Television Education Network Pty Ltd. A technical paper will accompany a Buying & Selling a Business DVD that will be released in October this year. The nine (9) part series was developed to educate those planning or evaluating a business acquisition.

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Assembling the advisory team

Part 1 – Planning a business acquisition

In the context of the Acquisition of a business an advisory team (Advisory Team) can take many forms. The reality is that not all attempted acquisitions are successful, therefore to maximise the probability of making a successful acquisition there are many factors to be considered in assembling the advisory team ranging from do you need one at all to what are the teams roles and responsibilities.

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Selecting and appointing the lead consultant

Part 2 – Planning a business acquisition

Selecting the lead consultant (Lead Consultant) will again depend on the nature of the Target, the characteristics of the Acquirer and the anticipated scope of work for the Advisory Team. There are many considerations in appointing the Lead Consultant however in our view, it is critical that they be given the appropriate resources and delegated the power[1] to effectively coordinate the activities of the Advisory Team. These factors are important to minimise costs and the time taken to successfully complete the Acquisition within budget.

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Should the Lead Consultant be a lawyer?

Part 3 – Planning a business acquisition

Declaration – the author of this paper is an admitted lawyer with a Principal Practicing Certificate admitted to practice in the Supreme Court of Queensland and the High Court of Australia.

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Working with Expert Advisers

Part 4 – Planning a business acquisiton

Depending on the nature of the Target, the characteristics of the Acquirer the scope of work to be completed by the Advisory Team it may be that specialist advisers (Expert Advisers) are to be retained.

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Getting confidentiality agreements in place

Part 5 – Planning a business acquisition

Confidentiality Agreements (Confidentiality Agreement or NDA’s) are essential in business Acquisitions, particularly if either the Target or Acquirer is subject to the ASX Listing Rules. Whilst generally an equitable obligation of confidence is applicable, a Confidentiality Agreement reduces the obligations of the parties to writing to ensure that there can be no miscommunication of the parties intentions.

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Readying employees and others for the due diligence process

Part 6 – Planning a business acquisition

Prior to the Target being approached, the scope of the likely legal and accounting due diligence should be determined by the Advisory Team. The scope of the initial due diligence can be broken into elements with the Lead Advisor allocating roles and responsibilities between the members of the Advisory Team including the Management Representatives.

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Preplanning for method of acquisition – shares or assets?

Part 7 – Planning a business acquisition

Assuming that the Target has been identified and approached publically available information is available to reveal the background of its structure. This information will be available prior to the execution of any Confidentiality Agreements or the commencement of any formal due diligence by the Advisory Team.

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Choosing a Business Valuation Methodology

Part 8 – Planning a business acquisition

This part of the series of articles was contributed by:

RSM Bird Cameron Chartered Accountants Logo CMYK

 

 

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Should you work in the business before you buy?

Part 9 – Planning a business acquisition

Whether or not the Acquirer should work in the business of the Target before making the Acquisition will really depend on the nature of the Target and the characteristics of the Acquirer. It is generally not applicable in the case of higher value Acquisitions.

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