How To Respond To An Acquisition Approach

Lee Humble is an Associate Partner at MHA Tait Walker Corporate Finance and has 15 years of professional services, banking sector and Corporate Finance experience, having spent time in London and the North West. Here he shares his expertise on how to respond to an acquisition approach.

What are the important questions to ask?

As a business owner you may find yourself in a position whereby an interested party has disclosed an interest in acquiring your business. In this scenario it is vital you ask yourself some key questions: who is the acquirer? Do they trade with your company or with your customers already? Do you know why they are interested in acquiring your company?

What information do they have in relation to your company? The questions to ask are plentiful and it can be very beneficial for you to engage professional advisers promptly who are well versed in dealing with such an approach. Given the potential disruption that can follow, it is key to address the interest swiftly and comprehensively. This should include an assessment as to your sale readiness, your valuation expectations and the capability and motives of the interested party.

Data Protection and Confidentiality are key

It is vital that arrangements with regards to data protection and confidentiality are put in place and that both parties understand what each other require for things to move forward. This often includes your latest detailed financial statements, management accounts and financial projections; and care should be taken as to the level of detail provided. At this stage no formal or thorough due diligence will commence but an appropriate level of information will be required so you can move towards a discussion in relation to outline valuation.

The Due Diligence Phase

Assuming suitable and appropriate responses are provided you can then enter a phase of due diligence in which you will need to assess who within your company will be made aware and how you will deal with a series of data requests. Your advisers can assist with this and can often prepare you for such a period with a view to minimising business disruption and screening all acquirer and adviser questions.

Ask the Experts

Unsolicited approaches can often catch you off guard but may also present an attractive opportunity for you. Following and managing this process can be a difficult task and one where outside assistance may prove to be extremely useful. Appointing advisers as early as possible will be an important consideration and will allow you to keep on top of your daily duties within the company, whilst also providing a level of expertise which can assist and smooth any negotiations which may follow.