There’s a myriad of reasons why an M&A deal may fail, but there are certainly more common and basic scenarios that business owners can look to avoid.

Some of the basic reasons include:

• Lack of detailed head of terms

Magma Corporate Finance’s approach is to front-end the negotiation and agree on as much of the detail as possible at the head of terms stage. This ensures both the buyer and seller have a mutual understanding from the offset and reduces the risk of price chips later on in the process.

• Allowing for a dip in trade

Building a little wiggle room into forecasts safeguards the transaction and also offers the potential of good news if the business outperforms the forecasts!

• Avoiding unwelcome surprises

During the due diligence stage, our team will always ask the client whether there is anything (however minor) that may concern the buyer. Full transparency on these potential stumbling blocks allows our team to ensure this information is presented tactically, rather than it being uncovered during due diligence.

• Buyer and seller fatigue

Our Corporate Finance team run a slick and tightly controlled process, ensuring the buyer and sellers are engaged throughout.

• Funding

Particularly in the case of the buyer having a limited track record of acquisitions, it is imperative to establish early on how the deal is being funded, when funds will be available and whether the buyer can afford to pay!

Get in touch

Magma Corporate Finance are experienced in navigating the many dangers of the process, and working with business owners to help them realise their commercial plans and ambitions. Find out more by calling 01788 539000 or 0116 261 0061, or emailing [email protected].