Accelerated M&A
May 2009
What is "Accelerated M&A"? When is it appropriate and how can it add value?
What is accelerated M&A?
Accelerated M&A is used to describe a sale process where the usual timescales involved in selling a business are dramatically reduced.
A typical sale process can take between 3-6 months but an accelerated process is usually measured in weeks and in extreme cases only days.
Why use accelerated M&A?
Accelerated M&A is usually appropriate for situations where value needsd to be realised in a short timeframe in order to avoid the possibility of an unplanned insolvency.
More value can be typically realised through a controlled disposal exercise as opposed to an unplanned insolvency. As such in the vast majority of cases acting early will lead to a better result than a forced sale in insolvency.
The act of entering administration will itself destroy a significant element of value within any business and this is why accelerated M&A is often a better solution to maximise stakeholder value.
What causes the need for accelerated M&A?
Accelerated M&A is usually triggered by a change in market conditions which leads to financial stress in a business or where a stakeholder of the business experiences a change in circumstances.
Stakeholder changes may include:
- A need to use capital elsewhere
- Change in strategic direction
- Change in personal circumstances
Market and business changes may include:
- Alterations to banking arrangements or withdrawal of facilities
- Loss of a major customer
- Changes in foreign exchange rates
- Dramatic reduction in demand
- Increases in input prices
- Increased requirements for working capital
What does an accelerated M&A process typically involve?
Each process will be different and should be individually tailored to the company's specific circumstances and the stakeholders needs. However there are four key steps which are common to most accelerated processes:
- Gather information on the business, prepare marketing materials and generate a list of likely purchasers
- Contact prospective purchasers, or possibly investors/bankers in the case of a refinancing
- Receive offers and report to stakeholders
- Legal and commercial negotiations and completion
What are the typical outcomes following an accelerated M&A Process?
The typical outcomes of an accelereated M&A process are:
- Sale of shares of the business
- Business and assets sale
- Refinancing, involving new debt or equity
- Sale of indebtedness
- Other restructuring process
Why use Momentum?
Momentum only operates teams of highly experienced professionals.
In situations of business stress and accelerated timescales experience is vital, which is why every Momentum engagement has at least two partners working on the deal. Each of the partners has more than ten years of relevant M&A experience with a proven track record of implementing creative solutions to maximise value.
Momentum has no conflict of interest with regard to insolvency proceedings.
Momentum is a specialist provider of lead advisory services. It does not provide insolvency advice and as such can be entirely focussed on realising maximum value for the stakeholders.
Unfettered access to national purchasers.
Momentum has an excellent track record of identifying and transacting with both UK and overseas based purchasers.