Acquire now for best value, firms advised

FIRMS are being advised to get on the acquisition trail in the next six months to get best value for their investment.

According to Andy Wood, Yorkshire regional chair of R3 – the insolvency trade body – and partner in The P&A Partnership, companies that have access to acquisition finance need to reach agreements before next Spring before economic conditions return to something “approaching normality”.

His comments come as the first signs of economic recovery are beginning to show within corporate markets.

Earlier this year R3 predicted that the Autumn would see an increase in the usual levels of deal activity due to a continuing fall in company values and increased clarity over the general direction of the economy.

Mr Wood said: “Through the recession there have still been some company acquisitions going on in the region, which has been good news in terms of safeguarding jobs and economic output.

“While we can’t yet say for sure that the recession is nearing the end and while we know that its effects will last long after it is technically over there is no doubt that conditions are improving and an increasing number of companies are exploring their acquisition options.”

He said the difficult economic conditions always brought opportunities for some businesses and there were now a good number of commercial opportunities available for those with the capacity to move quickly.

“There are plenty of ‘zombie’ companies out there just ticking over at the moment but with the right financial investment and management input they could make far better progress and reap far greater awards,” Mr Wood continued.

However, he stresses that firms should ensure they are fully aware of the potential risks involved in any deals and of the right way to approach them.

“The issue for purchasers as always remains choosing the right target with an added factor that buying companies in financial difficulty or insolvency is different to buying other businesses – things move faster by necessity, there is less due diligence and, with insolvent firms, there are no warranties,” said Mr Wood.

“Potential purchasers need to be aware of the risks and be prepared to move quickly when opportunities arise, and there are a number of important areas in which businesses can be starting to plan now for future acquisitions.”