Top 10 M&A dealbreakers: #1 and #2

As experts in selling companies and completing transactions, we were recently asked by Growing Business magazine for our thoughts on the ‘top ten dealbreakers’. Two of our ten were:

Don’t be opaque

That problematic area of your business – be it in your accounting, customer base or banking relationship – cannot be hidden. Not only will due diligence uncover flaws in your business, it will write them up in screaming capital letters…

Daniel Domberger, Director of Livingstone Partners, explains: “Trying to hide [ a problem ] is almost always counterproductive. If a purchaser finds the issue, say during due diligence, the response will be much more dramatic. It may also have a big impact on the purchaser’s confidence in you and in everything else you’ve told them.”

Don’t complicate your tax

Your accountant might think he’s being clever, but complex tax structures are a turn-off when it comes to buyers. If you have a sale in mind it’s best to forgo tax avoidance for the sake of clarity.

“Unfortunately, some owner-managers’ tax planning is so complicated that it’s difficult to unwind in the context of a sale, or crystallises far greater tax liabilities than expected,” says Daniel Domberger.

“Basic tax planning is sensible and recommended – using EIS relief, EMI share options, and making sure you benefit from Entrepreneurs’ Relief – but structures which are too exotic can deter purchasers or make a deal impossible to complete.”

We’ll post the other eight over the next few days. Meanwhile, you can read the full Growing Business article.


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