The Market Today & Business Valuations. Kevin Uphill Avondale. www.avondale.co.uk. The Market . Avondale SME/mid tier commercial focus. 35 transactions pa. Organic growth slow driving acquisitions (average 5 bids per project ).
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The Market Today & Business Valuations
Advanced economies no longer driving
global GDP growth
The UK M&A market
UK output- Recovery lagging last two recessions
Spare capacity increases competitive factors and creates driver for consolidation and Mergers and Acquisitions (M&A) activity.
Interest rates low to 2015?
Weak credit arena/volatility creating drag.
Overall 2012 M&A activity (by value) increased on 2011 with Europe most active due to consolidation. Activity down 20% on 2007 but down only 10% in sub £250m arena. 1st qtr2013 increased on 2012.
Adjusted Balance Sheet
Surplus cash negotiate extra to deal for tax savings but be warned buyers will try and include as goodwill, if its there.
Consider tax instrument to remove surplus – EFURBS?
Debt- Long term liabilities
Less - Cash
Adjusted Profit & Loss
Financial value x 4 est.
4 x £316k = £1.26 ml
Marketed on Offers
Offer achieved £1.9 ml
Dutch co seeking UK base
2. Deferred Payment
1. On Completion£1,450,000
3. Earn out£ 225,000
Deal structure is a multiple influencer
Charges on shares for deferred
Earn out on gross not profit- easier to define
Earn out on current not growth
Protections business to be run materially same
Access to records
Reverse non compete
Positioning - Modelling - Deal Structure
35% of projects international buyers 2013
Business Value by Design
The Profit Engine