There are business benefits to doing evaluations before making purchases, and there are also times when evaluations are necessary. In this TV show John Rugman explains why and when businesses need to be evaluated.

Business benefits from proper assessment

Evaluation is required for a number of different circumstances, it might be that you’re selling a business and you want to know what the value of that business is in advance of the process. It might be that you’re wanting to grant some share options or some shares to employees in that business, in which case you’re going to need evaluation for tax purposes. Or it could be that you need to report some fair values in your accounts and need some input into what those might be. So there can be substantial amounts of money at stake. I’m conscious of one client where we assisted them in relation to a potential purchase of that business and we managed to raise the initial offer for that business by 50%, so they achieved a price 50% higher than they would otherwise have achieved.

If you enjoyed this video about the business benefits of evaluations, why not browse more TV Shows on Inside Finance.

Merger and acquisition transactions work better if firms seek advice, according to Giles Murphy who discusses the issue in this TV show.

Merger and acquisition transactions

I think with any sort of transaction what you really need is people who can bring to bear their experiences of advising other firms. So as an organisation we advise Russell Jones and Walker on their transaction with Slater and Gordon, so we’ve got experience of mergers taking place where external capital is involved, and we’ve also advised on the largest domestic merger within the UK market in the last five years. In addition to that, we’re engaged on a regular basis to advise people on various aspects of mergers, and it’s this experience I think is particularly valuable when firms are actually seeking external advice on how best to proceed. I think the principle factors affecting mergers and their success is that they are people businesses. So while there are lots of regulations regarding the SRA, the ICAW and other regulatory bodies – there's also tax to take into account – a lot of it comes back to understanding the individuals involved, what their motivation is and how you can engage them in the process to allay their fears and emphasise the benefits.

Interested in merger and acquisition issues? Watch more from Giles Murphy.

 

Business advantage must be the focus of any merger discussions. In this TV show Giles Murphy explains one of the big reasons why mergers fail.

Business advantage clarity

I think it is about being very clear about what the benefits are of actually merging with another organisation. Inevitably, as I say, there will be downsides, there will be costs involved, disruption, and just the risk of a transaction of that nature. So being very clear up front and being able to articulate precisely why the merger is going to be beneficial for the business is often forgotten about or possibly gets lost in the discussions and the debates between the two firms. And I think unless that can be at the forefront of everyone’s minds as a reminder as to why this transaction is so important, the discussions can just generally grind to a halt and negotiation occurs over the more minor irrelevant points of the merger rather than focusing on the key issues.  

Browse Inside Finance for more videos discussing business advantage and similar issues.

The process of restructuring and merging will vary depending on if you are a partnership or a company . Giles Murphy of Smith & Williamson explains further in this TV show.

Impact of restructuring and merging

In some ways there should be no difference. If you’re a people business, whether you’re structured as a company or a partnership shouldn’t have that much of an impact. However, there are various idiosyncrasies of a partnership which mean that the partners are both owners and the workers within the organisation. So in terms of engaging with that group, you are talking to both the shareholder and the employees in one go. The key one in any professional practice will be the comparable levels of profitability because in practice it’s going to be very difficult to get the higher profit firm to engage with a lower profit firm and to encourage them that actually by adding them together everyone will be better off. So the starting point would also always be to look at the comparable levels of profitability.

There are more TV shows discussing restructuring and merging by Giles Murphy on Inside Finance.

Merger business benefits are not always key consideration when companies join together. In this TV show Giles Murphy discusses the trend of businesses merging with friends.

Merger business benefits - Key considerations

Far too often we believe that merger discussions happen simply because there’s a relationship between the two firms. Maybe the two managing partners or senior partners know each other, come up with this jolly good idea that the firms should merge, and that sets off a train of events. So the starting point is really to consider what are the genuine business reasons that two plus two will create four and beyond. In our concern and our experience, often two plus two only equals three.

If you found this video about merger business benefits, please browse more TV shows on Inside Finance.

Merger business advantage should be the first consideration when joining with another company. Giles Murphy of Smith & Williamson looks at quantifying the business benefits of a potential merger.

Merger business advantage of joining with a friend

I think the question of what are the advantages of a merger is actually the first question we will often raise with clients when we’re talking to them because quite often people will end up in conversations with other firms simply because there is a relationship there and somebody believed it was a good idea.

Bearing in mind the pitfalls and the downsides, and the costs involved in a merger, I think it’s very important that right up front people fully understand what the benefits are and can articulate them, and actually also put a monetary sum against them so they can actually quantify what the opportunity is.

There are more TV shows with Giles Murphy on Inside Finance TV and plenty more discussion about merger business advantage for you to explore.

Merger and acquisition can happen across industries and across borders. In this TV show Giles Murphy goes through the typical merger process.

Merger and acquisition in reality

In theory it should be a simple project management exercise. Unfortunately, in our experience, most people prepare very poorly for such an event and in practice spend a lot of time focusing on the merger transaction itself and forget to put effort into the integration process that should happen afterwards. Much would depend upon whether it is a simple domestic merger or whether there’s international firms coming together, but if we take a simple domestic merger, our view is, in terms of the negotiations, really a period of six to eight weeks should be enough for the negotiations to identify whether there are any key deal breakers that one might have to consider. As I say, what often happens is that people focus on that element of negotiation. They then breathe a sigh of relief when the deal actually gets done, and yet what we would say is that’s when the difficult work happens where firms need to prepare much better for the post-deal integration because that ultimately determines how successful the merger will be.

Browse Inside Finance TV for many more videos on merger and acquisition processes.

Restructuring and merging talk is common in professional practices but, as Giles Murphy discusses in this TV show, consolidation has been slow to materialise.

Restructuring and merging of the marketplace

If you look at the annual surveys that we’ve done of the marketplace over the last five years plus, in all of those there is an expectation that consolidation will increase and yet we haven’t really seen it happen at the pace people expected. A lot of that I think is simply because mergers are ill thought through. There’s a lot of merger discussions that take place that don’t actually go anywhere. What will driver mergers through though is poor financial performance for firms where ultimately the only option they have is to join another firm simply to survive.

If you enjoyed this video about restructuring and merging, please browse the rest of the briefings and TV shows on Inside Finance.

A cross border mergers does not only involve 2 firms but 2 countries. In this TV show Giles Murphy explains why English law is often preferred for the contract.

Cross border merger contracts

I think English law is still considered to be a key factor in business transactions, and we do see scenarios where you have businesses from two countries engaging with each other, but the contact will be written under English law because the businesses trust the English courts to resolve any differences.

So there’s a great opportunity to export English law, but to do so it does require firms to have a presence in these other territories, and of course a merger is one way of achieving that.

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Inside Finance will continue to look at issues around cross border mergers. Look out for more from Giles Murphy.

Merger and acquisition has five principles, which Giles Murphy discusses in this TV show.

Merger and acquisition - essential merger factors

I think we often talk about the five Ps as being principles why mergers won’t take place.

Those come down to property, pensions and annuity arrangements, you’ve also got the people aspect of it and the culture.

There’s the profile of a firm or the brand, if you like, and how that’s going to be portrayed in the market.

And the fifth one is just the general level of profits, the comparable levels between the two firms.

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If you found this video about merger and acquisition interesting, why not watch more briefings and interviews on Inside Finance TV.

Restructuring by merging is now an accepted survival strategy in the financial industry marketplace, as Giles Murphy discusses in this TV show.

Restructuring firms across industry

I think there's an acceptance in the marketplace that there is an oversupply of particularly lawyers, but also all professional advisors to a market that at best is flat, in some areas may well be contracting, and therefore there’s simply a question of surviving the next few years. While we might be entering a more benign economic environment, clearly there are still some firms that are struggling, and one of the only options they will have is to find a larger party with which to merge to give them some sort of strength to actually really stand a chance of surviving over the next few years.

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Merger and acquisition can involve any sized firm but, as Giles Murphy discusses in this TV show, is more likely to involve a big and a small party.

Merger and acquisition - The big with the small

I think it’s much harder these days to actually execute a merger where you’ve got two similar sized firms. The reason for that is inevitably there’s a level of compromise that has to be achieved and therefore both firms often feel like they’re giving something away. So what we’re increasingly seeing is mergers taking place where there is a much more dominant party, which essentially acquires the much smaller firm. As a result of that, a lot of the difficult decisions that have to be taken post-merger can be executed in a much simpler way. ________________________________________________ If you found this video about mergers and acquisitions, why not browse more TV shows on Inside Finance TV.  

Corporate restructuring has followed the recent tax changes for professional practices according to Smith & Williamson's Pamela Sayers.

Tax changes and Corporate Restructuring 

It’s certainly not applying just to law firms. It’s all professional practices. I mean with regards to specifically just law firms, we’ve got the introduction of the Legal Services Act, which became effective last year, and we’re now seeing some firms effectively give up the ownership of their business and be acquired by another entity. Certainly like, for example, the Russell Jones and Walker that was acquired by Slater and Gordon. In fact Smith &Williamson were very heavily involved in that transaction with the corporate finance and the tax structuring. I was involved in that. _______________________________________________________ Inside Finance will continue to follow ideas around corporate restructuring, and will bring you more TV shows from the people involved.

Cross border mergers can be an exciting option, says Giles Murphy of Smith & Williamson, in this Inside Finance TV show.

Cross border mergers - Drivers and characteristics

I think the international option is quite an exciting one. The UK domestic economy is clearly struggling, and even with 1 or 2% growth as we come out of recession we’ll not be particularly exciting for professional firms. Contrast that with growth in Far Eastern countries and the emerging world of 10,12, or 15% and you can see why international mergers are attractive for UK-based law firms. However, not only does the merger have to deal with all of the people issues that you would have with the domestic merger, you also need to cover the different cultural issues, the taxation issues, and the different structures that are allowed and not allowed cross-border. So effectively it’s taking a UK domestic merger and adding a layer of complexity on top of that. _______________________________________________________________________________________ Inside Finance TV are very interested in restructuring and recovery strategies like cross border mergers. Look out for more TV shows with Smith & Williamson.

Restructuring and merging of legal firms, is what Smith & Williamson's Pamela Sayers is predicting in this Inside Finance TV show.

Restructuring and Mergers

I think we will see more mergers within the legal profession. I mean there’s certainly a great deal of merger chatter at any one time. I mean the old saying of one managing partner phoning another, saying “Fancy a cup of coffee?” what it really means is “Fancy merging?” Obviously, putting two mediocre firms together, both struggling perhaps, doesn't make a stronger firm. So I think we’ll definitely see some more consolidation within the marketplace. I think we’ll also see firms expanding more internationally where there’s stronger parts in other jurisdictions to improve the profitability of their firms. And I think we’ll see more firms go down the Legal Services Act and become an alternative business structure, and perhaps either dispose of part of their business or sell their business. ________________________________________________________________________________________________________ Inside Finance will continue to look at restructuring across different industries in upcoming TV shows.