|
Sam Toulson started a discussion on mergers and acquisitions by outlining that there is likely to be an increased number in the construction sector. This is due to the scale and financing of projects as well as the tender requirements.
He commented that when looking at the big deals over the last ten years, it does suggest there is going to be an acceleration of M&A. In terms of the key questions over the next 5 years, there is going to be an increased level of debate as to the structure and direction in which a number of companies within the industry feel they need to progress. Deals have to be strategic and provide the right balance given the price that is paid.
The client/acquirers/target is primarily concerned about the confidentiality of their approaches and the effect this could have on the existing business and staff. It is key a business has a plan in place to minimise this disruption. Generally it is found that a beneficial approach is to have integration plans and staff support before the actual acquisition takes place. This helps to ensure an efficient outcome.
When soliciting approaches although it can feel uncomfortable to get the best deal it is imperative that more than one person is sitting at the opposite end of the table.
Sandy Fraser emphasised the importance of clear goals and objectives within merger and acquisition activity. He stressed that although there is a formal process the gut feel of a deal is always important. It is important that the deal feels right.
He continued by outlining some of the reasons as to why companies look into M&A activity, such as to gain clients, market share, diversify work streams etc.
However, whatever the objective it is key that the financials are clear. Within this there will always be questions as to the added potential and so it is important to assess financials thoroughly. It is important that aspects such as leverage and debt are extensively explored during such activities.
Sandy stressed that people in the process play as much of a role as the financials, is there trust, can you work together effectively, is the human capital likely to stay in the business, does the employment structure need to evolve to meet future challenges.
Geoff French added that there were a number of pressures in the industry; size, breadth, and reach. The result of these factors is a continuing trend of further M&A activity. Given his experience he said the process through which activity takes place is very important. This involves may factors including; how your companies ownership affects your approach and reporting requirements both pre and post-acquisition; The actual process of informing the markets, and being able to deal with any subsequent speculation; Ensuring that senior staff in the organisation are kept in the loop but whilst also maintaining the a degree of confidentiality.
|