Going global: planning an exit

For an owner-manager planning an exit, looking beyond the traditional buyer markets may now be the way forward.

The UK M&A market may have been in a state of flux for the past four years, but Lee Wojtkiw, managing director at BlueSky Corporate, says that overseas buyers are increasingly seeing the country as a source of attractive acquisition targets.

‘Foreign acquirers seeking to diversify into new geographical markets are more often than not looking to the UK as their first port of call,’ he states.

In recent times BlueSky Corporate has focused entirely on sourcing cash-rich UK and overseas acquirers for its clients.

Currently it is in discussions with buyers from India, Australasia, Brazil and USA, who Wojtkiw says have been surprisingly active with interest there driven primarily by the uncertainty in the Eurozone.

FOREIGN SUITORS

Purchasers are targeting UK companies which can offer ‘immediate economies of scale’, Wojtkiw adds.

‘Buyers are now adopting more of a plug and play approach when it comes to acquisitions and are looking for target companies that can be integrated cost- effectively. These are the companies that are attracting the best values,’ he believes.

However, even when acquisitive companies identify a target, deals in today’s market are now subject to a greater degree of risk assessment. ‘Buyer due diligence is fundamental to achieving higher values for our clients,’ Wojtkiw explains.

BlueSky commits significant resource to market research, aiming to identify strategic buyers with the financial means to conclude a transaction.

Wojtkiw reckons that in today’s market, rather than adopting a mass approach to buyer targeting, it is more effective to focus on the strategic and financial considerations in each individual industry to identify only those companies that would gain strategic benefit from a deal.

‘The upshot of this approach is that more often than not the prospective purchaser ends up paying the optimum price for our client’s company,’ he claims.

GETTING REAL

In addition to this greater geographical openness, a more pragmatic approach to dealmaking has now been adopted, Wojtkiw says, with those at retirement age now prepared to consider more innovative transactions. He believes such vendors are currently more receptive to deals that will see them accept a value which is marginally lower than initial expectations, but involves a carrying interest that will ultimately take them to the price they are seeking.

For the coming 12 months, Wojtkiw sees the challenges facing M&A practitioners as being along the same lines as 2011. The real issue, he says, is restoring confidence within the Eurozone, after which deal activity will hopefully return.

‘There are still a lot of cash rich acquirers out there. The test is to position your business effectively so that you can secure the best return,’ he concludes.

 

 

Hunter Ruthven

Hunter Ruthven

Hunter was the Editor for GrowthBusiness.co.uk from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.