How to initiate a merger opportunity

There are several strategic reasons why companies might seek to merge with another business. Mergers can be the ideal way to solidify and greatly enhance a company’s position and offering in its chosen sector, while considerably reducing overheads through economies of scale. In short, the value of the new combined businesses should be significantly more than the sum of its parts.

Before approaching a business with which you may wish to merge, it is important to set out the strategy and benefits from their point of view. This should cover key questions such as the revenue and cost synergies available to the enlarged business and therefore it’s increased valuation, the management of the enlarged business, the merger ratio, and the exit strategy.

This preparation is key and making such assessments is critical. This is where a good corporate finance advisor will have a pivotal role to play, not only in helping to analyse potential merger targets, but also in taking a neutral role in making an approach to a business that may well be a competitor of yours while also convincing the target that your plans are serious.

We work with owner managers of UK SMEs that are looking to fully or partially exit the business they’ve grown. Our value lies in helping clients assess their readiness to exit, finding the right buyers willing to pay the right price and managing the sale process whilst minimising associated risks. For a confidential, independent, no obligation discussion on how to sell a business, click the 'Let's chat' button.