M&A – Protect the Value of the Deal

Forensic & Litigation Consulting

July 25, 2017

deal

The objective of every transaction is to enhance shareholder value. So why don’t they all achieve that objective? No matter how much due diligence you do, it is not until the deal has closed that a purchaser truly learns what ‘lies beneath’. The potential repercussions from a deal turning sour are many and can ultimately result in irreparable reputational damage. If this is something you want to avoid, keep reading!

Completion does not mark the end of the M&A process, nor does it mean the risk has subsided. In fact what lies ahead is a lengthy and often challenging process of business integration.

Another much less planned, but equally important process, is the preparation of the completion accounts and resulting purchase price adjustment. This can have a significant impact on the ultimate purchase price (and therefore the measure of returns) and yet is often barely given a second thought.

Having helped clients through many post acquisition disputes, acting as Expert Determiner or for one of the involved parties, we often see this process result in significant consequences that could have been avoided. For example:

  • A purchase price adjustment resulted in an increase in the price paid by more than a third of the base consideration;
  • A target was ultimately placed into voluntary administration within a year of the transaction and then became the subject of a lengthy litigation process against the vendors and insurers.

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