M&A

Selling a company tends to be a long process that takes a couple of months. In practice, it starts much earlier than the actual negotiations with the buyer. That is when the business owner can make mistakes that will cost them dearly. What are these traps and how can they be avoided?

Completion Accounts is one of the two mechanisms (the other being the Locked Box) used to determine the final price in the process of closing M&A transactions. In this model, the final acquisition price is determined only on the basis of the balance sheet of the target entity prepared as at the date of signing the final contract that transfers the ownership from the Seller to the Buyer. However, the practice shows that preparing such data for the said date is actually impossible, and the process of obtaining and processing it can take weeks or even months after the Share Purchase Agreement has been concluded. So how does it work?

Locked box is a formula for closing M&A transactions that is proving increasingly popular in recent years and tends to replace completion accounts. What is essential for the locked box arrangement is that the transaction price is determined on the basis of the historical balance sheet at a pre-signing date and is not then subject to any post-completion adjustment.

On the other hand, it is not always the case that the owner wants to sell the whole of their business. Moreover, and not infrequently, the owner is not even willing to sell the controlling stake. However, there are situations where selling a part of a business seems to be a good and reasonable solution.

Contrary to what it may seem and what people usually think, there are different ways of financing transactions. Most entrepreneurs I work with say that cash is the source of funding. Sellers tend to assume that the buyer opts for this form of funding the deal. And indeed, it is the most popular method of payment in a transaction between the parties involved; however, it is good to know that cash is not the only option the buyer has in a transaction.

We are please to inform you that our Tax Partner – Piotr LISS – won an award (category Excellence in Tax Consultancy Services – Poland) in the Mergers & Acquisition 2017 competition. As a result, information about RSM Poland appeared in the publication of Corporate Insiders 2017 M&A Awards Winners Guide (page 26), which will be delivered to over 1 million companies all over the world.

Integrating two companies remains one of the most difficult aspects of a mergers and acquisitions deal. More than 70 percent of post-merger integrations fail to capture planned synergies and value. Why?

It is not my purpose to enumerate the financial benefits of the due diligence process during negotiations, because this was discussed in the article "Due diligence − a service worth millions", but I want to point out the risk that is associated with too much confidence in yourself and your infallibility.

RSM Poland was honored with the titles of M&A Deal of the Year “Sale of C+N Packaging to PSB Industries’’ & Best for Brand Valuation – Poland and Tax Team of the Year – Poland & Best for Financial Due Diligence 2015 – Poland in this year's edition of the M&A Awards competition. The awards granted since 2010 by the British AI Global Media, Acquisition International Magazine and DealFlow Source are aimed at awarding the most deserving specialists in the business, legal, financial and investment communities.

Since I started providing transaction services, in other words advising Clients in purchase and sales transactions as well as enterprise mergers and acquisitions, one question has been constantly on my mind: what is truly an advisor’s role in a transaction? What is my role and what is the role of the other party’s advisor? The answer is pretty clear if a Client commissions RSM to sell their company or to buy one – in such situation, our role is limited to negotiating best price and securing the Client’s interests in agreements. All the actions taken are to satisfy the highest imperative goal „I want to sell” or „ I want to buy”. However, sometimes the imperative “I want to sell/buy” is not as strong as the mentioned “want”. We often hear our Clients saying “I could” and not “I must”, “I would like” and not “I want to”.