Gerald Edelman, Chartered Accountants and Business Advisers, advised Lucena Capital in the strategic acquisition of Impress Group, a company established in 1997 with operational sites in Blaydon and Washington. The firm is known for tackling intricate client challenges throughout the North East region and further afield.

Jason Young has ascended to the role of managing director, succeeding the retiring directors George Peel, Steven Young, and David Haley. With a tenure of 23 years at Impress, Jason Young steps up with the backing of Ben Suquet, the driving force behind Lucena Capital. Suquet’s investment in Impress marks a collaborative effort with Young to chart the company’s progressive course.

The announcement of the deal was marked by Jason Young's declaration of entering a thrilling era for Impress. Plans are underway to funnel substantial investments to enhance the company’s offerings. Young spotlighted potential growth sectors and the intent to leverage emerging technologies in precision engineering to keep Impress at the industry vanguard.

Could you provide an overview of the strategic approach Gerald Edelman took when advising Lucena Capital on the MBO of Impress Group?

• Prior to beginning our FDD process we sat down with our client and discussed any specific concerns Lucena Capital had with this particular transaction and ensured that we focussed on these points.
• Our goal was to focus our due diligence around particularly risky or complex areas of the transaction.
• This focus allowed us to highlight all potential risks to our client and allow greater levels of attention on how best to mitigate these.

What were the most significant challenges faced during the MBO process, and how did your team work to overcome them?

• Complex transaction; multiple entities being acquired as part of this transaction – Management did not produce consolidated group accounts. Initial focus was on producing a set of consolidated accounts for our client.
• Complex areas of the transaction included considering the impact of the disposal of a non-core subsidiary; Impress Precision Machinery as well as the discontinued operations IWL Architectural and Tyne & Wear Fabrications; increased the complexity of our work and increased the level of analysis required to ensure our client was aware of any potential risks to Lucena Capital.

How did Gerald Edelman ensure that the advice provided aligned with both the short-term and long-term objectives of Lucena Capital in the acquisition of Impress Group?

• We included analysis of key customer dynamics on a consolidated basis (e.g. wins, losses, churn, pricing, volumes, trading terms, length of relationship etc.) as well as analysis of the top 20 customers and 20 suppliers on a consolidated basis); provided insight to Lucena that materially impacted short term decision making.
• Summary of projected trading results of the Impress Group including current year forecast for the period to March 2028. We included comparison to historic results and commented on any significant trends to provide clear insight to our client to help mould their long-term objectives in their acquisition.

Can you discuss any innovative financial structures or strategies that Gerald Edelman employed to facilitate this MBO?

• As part of this transaction, we included analysis of the consolidated net working capital profile by key component across the period reviewed, noting key trends and any seasonality and commenting on what appears to be a normal level of net working capital for the Group. Further, we included a review of intra-month cash features of the Group and requirement for any additional working capital; this allowed us to negotiate an additional level of working capital to be left behind by the Vendor’s at completion.
• Included detailed analysis of net debt in the Group across the period reviewed and quantified the impact of this on Lucena Capital.

Post-MBO, what role does Gerald Edelman play in the ongoing relationship with Lucena Capital and Impress Group, and how do you support the newly formed entity in achieving its business goals?

• Gerald Edelman engages in regular conversation with Lucena Capital and provides ad-hoc advice when required in relation to the post-completion running and operations of the Impress Group.

You have to collect a huge number of documents that concern your company, even indirectly. Then, another employee from another company has to check it all; all the contracts have to be done correctly, and everything else. This used to be quite a complicated process, but today, with the influence of modern information technology, it has become much easier. The best data room providers can provide you with exceptional opportunities to optimize your time and automate this process. Read on to learn more.

Who can use VDRs for M&As and how?

The technology behind virtual data rooms is distinguished by a wealth of functionality and a relatively flexible application for the majority of business operations that take place within a certain firm. You don't need to be concerned about the nature of your business. For whatever reason, several business owners believe that they might not be able to permanently employ virtual data rooms for mergers and acquisitions in their organization. This is an error and one that happens rather frequently. Right now, most firms of any size can use this technology.

You will undoubtedly receive a good response to your question about whether a virtual data room can assist you in navigating the merger and acquisition process. You can accomplish the following tasks with the aid of a virtual data room review:

● Your coworkers who assist you in the merger takeover procedure will adore how simple it is to deal with the documentation now and how well it is laid out. In addition to using the full potential of contemporary technology, it helps to drastically reduce time, as noted in the case of due diligence. Additionally, the majority of virtual data rooms contain high-tech encryption and other deterrent security measures that prevent hackers from obtaining any information from your business.

● Due diligence will be carried out pretty swiftly and without the trouble you previously experienced. The technology being discussed in particular, which is modern, is advanced since it maximizes time. For contemporary businesses, time is the most valuable resource since failing to save time results in significant financial loss. By using data room software, you may nearly automatically compile all the paperwork needed for due diligence, save it for the future, and establish a safe environment where sensitive information can't be taken by unauthorized parties.

● Additionally, this technology will aid business owners in the merger and acquisition procedure itself. Because some businesses are adaptable and others are not, this technique has gained a lot of popularity in recent years. As a result, some businesses succeed in the market while others fail. This procedure is what makes mergers and acquisitions so common in today's business world. You may be confident that after installing virtual data rooms, your business will be nimble. For third parties that work with you on the issue, all of the material you have will be safeguarded and presented most practically.

Even if we do not particularly take mergers and acquisitions into account, all of these aspects are crucial in the process of going through any company deal. Entrepreneurs assert that they are ecstatic about using this software. Independent studies have shown that all businesses that have adopted this technology are growing much faster than similar companies that use traditional management.

Reasons why you should try this technology in the M&A process

Today's year will be the year of modern technology, which is being developed at an even greater rate than it was in 2022. The popularity of modern technology and enterprise solutions for automating the entire workflow is no accident. Today's economic crisis, which has been caused by a multitude of factors, is forcing companies to move to fully centralized and digital power. What does this mean for corporate executives? It means that you must adapt to the modern conditions that the outside world is putting up with. Virtual data rooms are one tool and one solution for adapting your business to these conditions. Moreover, if things change in the future, the best virtual data room providers can help you adapt to those changes as well. This is not only an active tool but also a preventative one.

Here we give you the top five reasons why you should try a virtual data room within your company. These reasons will be described below:

● As mentioned above, a virtual data room allows you to adapt your business to today's environment. This is one of the important reasons why most entrepreneurs buy it and keep it in their company indefinitely. If we're talking about routine work, a virtual data room allows you to automate and optimize any process that goes on within the company. Even if you look at any subjective process, like communication level, the data room vendors fix that. This is a proven fact from independent researchers and users of this enterprise software and solution.

● The next reason to try this solution is to automate short-term business processes like mergers and acquisitions or crowdfunding campaigns. And you may not have known, but most entrepreneurs are afraid to buy a virtual data room permanently. There are reasons for that, like expensive technology and some installation complexity. Entrepreneurs are starting to buy virtual data rooms as temporary tools to help with business transactions. In addition, once a business transaction has passed, most entrepreneurs realize the importance of virtual data rooms even for routine tasks and continue to use the technology indefinitely. A virtual data room is used to automate business processes and to demonstrate due diligence. It significantly reduces the time and costs that you would need to cover if you were using traditional management.

● Technology is evolving. Online data room software is one of the great embodiments of modern technology that is constantly improving. If you are a conscious entrepreneur who understands the importance of technologies like artificial intelligence or blockchain in corporate tasks, then a virtual data room is for you. Most developers are now using massive artificial intelligence to help optimize costs within the company.

● It helps you connect with your customers. You'll be given a huge variety of tools to help you communicate with customers and understand their real needs. This was quite difficult to do before because your job evaluations were not objective. The data room services provide an overabundance of tools that let you know the real mood of your customers and help improve your business with feedback.

● Your employees will work together and make decisions faster. All of this is accomplished through technology, such as electronic document signing and, in general, finding documents completely in the digital space. This is convenient and secure at the same time. Paper, at the moment, is not a secure device to store any information. It can be stolen or destroyed. In some cases, it can be done without leaving any trace for investigation. This is not possible with digital technology, where the offender always leaves a digital footprint.

These five reasons are the most important. Notice the fact that the reasons don't end there. If you are an entrepreneur with goals for the future of your company, then you just have to look at the possibility of implementing a virtual data room into your business structure.

Conclusion

Future-oriented, the virtual data room trend is not even a moot point. According to unbiased researchers, this technology will only advance in the interest of enhancing business communication and data security. Several technologies, including artificial intelligence and frameworks, are being utilized to enhance departmental communication.

For any company's growth and development as well as the success of the M&A process, departmental communication is a crucial first step. If a worker doesn't comprehend their supervisor, the business will perform poorly and incur significant losses. The electronic data room assists you in solving this problem in the most convenient way for you and adjusting to the changing world as well as your colleagues with whom you are working on the M&A deal.

What does it mean if your company is acquired?

If your company is being acquired, it means that another company has purchased it and will have control over the organisation of the company. When this has happened, your company will form part of a single business entity. The company stakeholders will then make business decisions for your company that will assist in helping the larger organization reach its goals.

Why might someone acquire your company?

There are plenty of reasons why a company may choose to acquire another company: 

Portfolio growth - companies may use an acquisition in order to grow their portfolio. That means they are able to expand their client offerings and offer more products and services. This not only allows them to diversify their products, but also allows them access to a new target market.

Increased earnings potential - acquiring another company can realise more earnings which brings the company more money to grow and increases the value of the company, making them more attractive to investors.

Bigger market share - if a company chooses to buy one of its competitor companies, it means there is less competition in the market. Rather than compete for the same clients, they can work together and realise a greater market share with all products and services coming under one company name.

For tax liabilities - if your company has more tax losses, another company may choose to acquire your business as it will lead to less tax liability.

To acquire an asset - it may be that your company has developed something unique that could benefit other benefits. If that is the case, another company may want to acquire you in order to access what you have developed and help them succeed in their sector.

How can you prepare your company before it is acquired?

“Before acquisition, you can help to make your business better prepared for purchase,” explains Richard Allan of CapitalBean.com

“To do this, you should improve any areas of your business that you know attract buyer interest. As part of due diligence, you should know your valuation range and undergo a third-party assessment.”

“Make sure that your management team is on board with everything that is happening so that they can keep the business running smoothly and performing as normal while the company is undergoing due diligence.”

“Establishing an advisory board and transition team (including an M&A attorney, investment banker and financial advisor) will also help the acquisition go off without a hitch.”

What can I do during negotiations and due diligence?

After an offer has been made on your company, it is important to be discreet, only sharing the details of the sales process with essential parties. This is because until the details are absolutely final, there is still the possibility of the sale falling through. During the process, you should have regular meetings to check in with key stakeholders and make sure that everything is progressing as it should.

What should I do once the company has been bought out?

After the acquisition deal has closed, it is your responsibility to make sure that your employees know what this means for them. You should make the announcement something to celebrate and ensure that communication with your team is clear and consistent. It can be a stressful and anxiety-inducing time for team members as it creates a sense of instability. Make sure to check in with them and focus on the positives that will come out of the acquisition.

Finance Monthly is pleased to announce that its 2021 Finance Monthly M&A Awards edition has now been published.

Every year the Finance Monthly M&A Awards recognise the achievements of the world’s most prominent dealmakers, management teams, financiers and professional advisers whose hard work over the past 12 months deserves to be celebrated. The first eight months of 2021 have seen a focus on recalibrating strategy and accelerated adoption of technology as a result of the COVID-19 pandemic. With GDP and CPI rates promising growth, however, the hopes for strong economic recovery are emerging and the appetite for mergers and acquisitions is intensifying. It is now more than ever that the firms and professionals who operate in the M&A sector need recognition, as well as an acknowledgement that their efforts are never going unnoticed.

At Finance Monthly, we are extremely proud to be able to provide a platform that celebrates the M&A professionals who work tirelessly to ensure the smooth completion of complex deals and exceed their clients’ expectations every day.

Finance Monthly would like to thank all contributors and participants in the 2021 Finance Monthly M&A Awards. Congratulations to our winners and finalists.

To view the awards publication please click here

To view more of our Finance Monthly awards please visit our awards page.

The merger and acquisition market is on track to hit record levels in 2018. According to Mergermarket, the first half of the year saw 8,560 deals recorded globally at a value of $1.94tn, with 26 deals falling into the megadeals category of over $10bn per deal.

While M&As present incredible value for businesses, many organisations don’t put much thought into what happens after the documents are signed, says Neerav Shah, General Manager EMEA at SnapLogic. As a result, he continues, many past M&A deals have failed to live up to their promise, with organisations struggling to manage the cultural and technological challenges associated with these deals.

The landscape is littered with unsuccessful mergers and acquisitions, companies that did not heed obvious risks that, in retrospect, were avoidable. Instead, dealmakers focused on the benefits of the transaction, such as prospects for a larger market share, competitive advantages, reduced costs, increased efficiencies, and more diversified products and services.

While the opportunities need to be at the forefront of any deal, organisations need to also address the potential risks and challenges if they want to realise these opportunities. This means integrating newly merged companies effectively, and quickly, should be of paramount importance once a deal is agreed in order to keep critical functions operating at full speed during the post-transaction integration period, realise operational synergies in the ongoing merged entity and to align all employees around a single, merged corporate identity.

As consulting firm McKinsey put it: “Integrating merging companies requires a daunting degree of effort and coordination from across the newly combined organisation… Those that do integration well, in our experience, deliver as much as 6 to 12 percentage points higher total returns to shareholders (TRS) than those that don’t.”

The considerations for integrating the companies typically fall into two main areas: cultural and technological. While the first is an obvious challenge, merging two completely different company cultures, consolidating technology and data often proves to be a more complex task, not least because of the increased level of vulnerability to cyber security incidents both organisations will have during this process.

The sheer number of IT systems and cloud applications in use by companies today, also makes the process of integration more complicated. These days it’s not uncommon for a company to have inked partnerships with more than a hundred different cloud providers. When two organisations combine, integrating all the applications, systems and other sources of data consumes an inordinate amount of time.

Obviously, there is a need for data integrations to occur quickly and seamlessly, minimising the time in which the oceans of data flow from one system to another, from one application to another. Many companies are still struggling to integrate the data they hold within various systems in one company, so when two are involved they need to take a very process-driven approach to not only ensure that security isn’t compromised but also that the most can be made from the data.

Best practices include identifying all the data assets that need to be transferred first, and then determining the specific data standards, policies and processes that will be used to conduct the transfer. Rather than transferring all the data at once, consider a piecemeal approach in which different data sets are prioritised for transfer at different times. Both the finance and HR departments are good areas to start due to the importance of the data they hold in relation to not only business performance but the deal itself. Data that is not destined for transfer should be immediately destroyed.

Lastly, invest in integration tools that make it fast and easy to connect applications and different sources of data. Legacy technology requiring teams of developers to handcraft integration software on an as-needed basis is no way to address today’s rapidly expanding universe of cloud applications.

Companies undergoing a merger or acquisition need to find a fast and easy way to integrate data and applications. They need a single platform that users can rapidly connect diverse systems and applications at their vulnerable intersection points, narrowing the window of opportunity for hackers to attack.

By ensuring data transfers are closely managed so they can flow at enterprise speed, the pace of post-transaction integrations is accelerated. In turn, this assists dealmakers to realise the perceived value of the merger or acquisition at a much quicker rate—adding up into a rare win, win, win.