Corporate Finance: Patient Planning Offers Rewards; the Urge to Merge Is on the Upsurge. Mark Taylor Highlights How SMEs Can Successfully Join the Scrum

By Taylor, Mark | The Birmingham Post (England), September 21, 1999 | Go to article overview

Corporate Finance: Patient Planning Offers Rewards; the Urge to Merge Is on the Upsurge. Mark Taylor Highlights How SMEs Can Successfully Join the Scrum


Taylor, Mark, The Birmingham Post (England)


Whether or not you want to take advantage of the current trend for merger mania, there are distinct advantages to fusing your company with another or to acquiring a new business or competitor.

But to be able to reap the benefits, you have to understand the process and make planning your overriding priority.

In business, as in all aspects of life, it's nearly always imperative to start from a position of strength.

SMEs considering M&A activity - or a sale or joint venture - must first focus their plans on their own businesses and ensure that their competitive advantages are in place.

The above, allied with robust profits, reputation and a healthy market, will contribute to a successful merger or sale.

The objective must be the planning and creation of a business with a tangible competitive advantage - not fleeting critical mass or economies of scale.

Whether you are considering merging your business with a competitor, selling out to a predator or forming a joint venture, the process is largely the same.

Selling a business is, arguably, the most straightforward and a successful sale offers a good blueprint for other activity.

However, whatever option you decide to take, it is important to have a thorough understanding of the issues involved as well as the necessary timescales.

As far as a business sale is concerned, SMEs which aim to place themselves on the market need to address fundamental issues such as moulding the operation into a saleable form; planning the owners' financial position; evaluating market conditions; generating an attractive financial performance track record and pinpointing the optimum time to sell.

If all of these are under control, maximum value can be extracted via the sale.

If you are the vendor, acknowledge that your motivation must be short term and solely focused on maximising reported profit for the financial period prior to your sale.

This will create internal issues when senior managers realise the shift in corporate aims to short-term profit maximisation.

These concerns must be handled sensitively.

In some instances, this may help resolve uncertainties about ageing owners and managers.

Your business's tax position is pivotal, because you should maximise post-tax gain. Examine how shares in the company are held and your family's financial planning, including children's trust and how the sale's timing will affect your future.

Tax changes are inevitable and may affect proceedings. Movements in retirement relief, capital gains tax legislation and trusts are constantly under review. It is best to monitor trends with your advisers on a regular basis.

At the crux of the business sale is the all-important valuation.

The worth of a private business is undertaken on a number of different bases - often a multiple of post-tax profits based on the price/earnings of similar quoted companies discounted to reflect the non-marketability of private company shares.

Any valuation fluctuates according to the net assets of the business, profit growth potential and the acquirer's aims, allied with the state of the business being acquitted.

Acquirers need to know whether or not the business needs capital investment.

Will it require active or passive management? Are there urgent issues which need to be addressed, such as environmental problems? Are its customer and supplier relationships good? Are there any fundamental uncertainties overshadowing the sale?

Once these considerations have been dealt with, the final link in the process is dealing with potential purchasers, who can be found via a variety of methods. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Corporate Finance: Patient Planning Offers Rewards; the Urge to Merge Is on the Upsurge. Mark Taylor Highlights How SMEs Can Successfully Join the Scrum
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.