Buy or not to Buy

Merger & Acquisition – Due Diligence is the key

A long-term Merranti client had decided that expansion through Merger & Acquisition was the answer to growth. The purchase would have seen them take out the competitor within walking distance, and expand their operation using the new space.

Merranti Accounting (London) was asked to get involved by completing the negotiations for the Merger & Acquisition and analysis of the accounts. We were also requested to review the lease which needed to be renewed.

Initially, we managed to reduce the purchase price by 15% as the sales figures reported did not match the sales particulars. Additionally, a number of the staff were long term service and would have been costly in respect of redundancy payments if the company wanted to scale down the staffing due to a crossover of existing.

Lastly, the lease was being held over, although the landlord had agreed to a new lease with our client the dilapidations cost would have been considerable.

Following our advice and report, our client decided to pull out the purchase only to see the company close some three months later, which achieved his expansion as due diligence costs only.

Category: Merger & Acquisition
Client: Project 89
Date: 01/08/20
Website: n/a