Tag Archives: Acquisitions

PM+M Client WEC Group Limited Acquire HTA Group

shutterstock_234197374Last week saw the completion of the multimillion pound acquisition of HTA Group by PM+M client WEC Group Limited. The acquisition will enable Lancashire-headquartered WEC Group to continue to dominate the UK’s laser cutting and fabrication sector.

Wayne Wild, commercial director of the family-owned WEC Group, said: “This is an exciting new chapter for HTA Group, its workforce and its present and future customers.”

“HTA’s partnership with WEC Group will create a major new force in the UK’s laser cutting and fabrication sector and allows both companies to offer more to our customers.”

“Continuous investment in new technology and in our workforce has been the hallmark of the WEC Group’s success and we’re delighted to welcome HTA into our growing family. It’s a really great fit for our business.”

“As another family run company we’re aware of the name HTA has forged for itself and its reputation for high quality work, service and delivery. Our aim is to build on that.”

“Both companies share the same values of continuous investment, commitment to training and a strong belief in customer care. That’s why we believe this new partnership is right for both businesses.”

“The expanded group makes us one of the largest laser cutting and fabrication operations in the UK. It means we can offer more services and skills to our customers.”

Jim Akrill, Corporate Finance Partner at PM+M, provided commercial advice, comprehensive deal support and financial due diligence to ensure the deal was completed satisfactorily. Jane Parry, PM+M Managing Partner, also advised on the complex tax matters surrounding the acquisition. Forbes Solicitors provided legal advice throughout the deal.

Helen Clayton On Mergers & Acquisitions In The Legal Profession

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Some of the latest challenges facing the UK legal profession in recent years include succession, exit planning, gaining market share and competitive advantage through merger or acquisition and dealing with the financial and other related impacts of regulatory changes. This applies from the largest firms to sole practitoners.

As law firms continue to develop into businesses with much more of a corporate feel, more advance thought is being given to the future, the threats and opportunities available and therefore how a firm’s strategy is developed.

Acquisitions often form part of a firm’s medium or longer term strategy, whether through acquisition of an entire firm, in part or simply through the acquisition of assets such as work-in-progress. Being part of a firm’s strategy is one thing but making them work and be successful in the short and longer term is a real test. Being the only strategy therefore is a sure fire way to standing still, resulting in the financial and personnel challenges that then inevitably brings. It cannot just be about the numbers and aiming for the two plus two equals five.

Culture and People

Research shows that almost a half of all transactions fail to meet expectations for cultural reasons. So, perhaps it is not about the firm but about the people. A law firm is a people business, whether through the ownership and the people employed or whether through the end user of its services. You cannot ignore the people element of a transaction and what they need in order to be able to contribute to making an acquisition successful – on both sides of the deal.

Communication at every stage will be critical. Whispers and rumours will be afoot and heading these off in advance can only help smooth the transition. A key risk will be loss of people, including leadership and management; this can create great uncertainty for employees and they could follow. Whispers in the profession can lead to competitors seeing an opportunity to sweet talk clients.

The combined culture of the firm will be important to understand for all involved. Do the cultures currently align? If not, which firm is the dominant and will it be this culture that wins through? Is that the right answer and who and how will they make this work?

Change can be a barrier for people especially if they feel vulnerable. Getting them on side early enough will be important; however depending on the persons involved, the stage at which they are made aware of the proposed or impending transaction will matter.

There will be a need to address upfront who will form the future leadership and management team. Do shared roles really work? For example, two managing partners. The partners need to like and respect each other, understanding each other, reporting responsibilities and lead by example. Will there be a board and how many from each side will it comprise? When it comes down to it, people have pride in their titles and this can be a sticking point. Further, the name of the combined firm will be high on people’s agendas. Dealing with these politics at an early stage will avoid unnecessary time and cost at a later date, which can inevitably lead to a breakdown in negotiations totally.

If there are multi sites post transaction, how will the reporting work? How will the culture alignment across various offices work?

Due Diligence

Therefore, and not just for financial reasons, detailed due diligence is critical to achieving a successful transaction – on both sides. Getting underneath the reasons for the transaction will drive each side’s focus for diligence. These might include competitive advantage through market share or wider service offering, geography, client relationships amongst other reasons. Financial reasons will always be up there, driven by the on-going desire for increased PEP, though these should not be the focus. Understanding the financial impact will still be important however.

Going back to why a firm wants to enter into such a transaction – if the firm is struggling in some way, then it is also likely going to struggle to have a significant voice at the boardroom table moving forwards. If there are internal issues to be resolved, then these should be dealt with before diligence commences as they will be highlighted and used as a mechanism for driving down ‘price’; for example, old debt or work-in-progress that holds no value, internal disputes, poor claims history etc. When I refer to price, often in law firm transactions there is no price unless it is a clear exit mechanism; however, resulting equity points, for example, could be reduced compared to others.

A consideration, which may depend on the size of the transaction, will be to who actually performs the diligence. There should be financial and non-financial diligence performed, with experts carrying out the work. It may be that an element of this can be performed in-house; however I suspect that a great deal of diligence for two law firms to a transaction is performed by professional advisors. In a scenario where both firms have the same advisors, there will need to be a discussion as to how this conflict is resolved.

Project Management

Throughout, from initial conversations through to diligence, transaction day and beyond, project management should never be underestimated. There are so many stakeholders, which generally results in an increasing amount of internal politics, that a formal project management team with a respected leader is essential.

Initial conversations will need to be confidential and managing that process will always prove difficult. Meetings will need to be held off site but not in a local hotel or coffee shop where other professionals and clients may meet. Risks will need to be considered at every stage of the project.

Agreeing on timelines, deliverables, accessibility and availability will be vital to being able to progress as both sides wish. Ensuring there is commitment to delivering will be key however it should not detract from the day job of leading or managing the existing firms nor delivering to clients.

The project management team will require a variety of skills other than project management! Areas such as IT, infrastructure, property matters, finance for example. These roles need to be assigned early in the process, skill gaps identified and resources sought to fill them. Undertaking such a project in the right way is not inexpensive.

Funding

Whilst I believe that financial reasons should not be the driver for a transaction, understanding the financial impact will be very important.

There is the risk, through management being distracted, of not focusing on each individual firm on the lead up to completion, which could result in a loss of clients, income, profit and key talent. Such impacts will undoubtedly change the structure of the deal on the table. This validates the need for a focused project management team who can oversee and deliver the transaction aside or over and above the day job.

Funding will be an issue at some stage and will need to be addressed. Do the combined financial forecasts indicate the requirement for additional funding in the short to medium term and where is this going to come from? If the same bank is involved on both sides, understanding their appetite for the combined firm going forward will be vital, together with potential additional funding.

Referring back to partners working together, understanding each other’s personal financial position will also be important for a transaction to be successful. Whether partners have savings or equity to inject could become an issue.

What if the transaction doesn’t materialise?
Simply, it’s back to the drawing board on strategy. Understanding why this transaction didn’t work will be important to be able to draw experience, make changes and establish guidelines for future potential transactions. Reverting back to the drivers for entering into such a transaction should not be overlooked.

What if it does happen?
Hopefully, this is fantastic news and everyone is on board, including clients, as to what the combined firm is able to deliver, matching the initial reasons for each respective firm to enter into this deal, which no doubt will have taken months, if not years, to get over the line.

The hard work now begins in ensuring it does deliver. The project management team will still be vital to provide focus on this, enabling the leadership and fee earners to focus on quality service delivery and financial results in what may be a new office with new infrastructure. Settling in time can be minimised through an effective project management team.

In conclusion, there are so many aspects to consider in striving to get a deal over the line and for it to be successful, delivering all that was hoped for. Communication is the one word I would use to facilitate all of this; communication at all levels, internally and externally but this needs to be managed and, yet again, validates the undoubted need of a skilled project management team.

Helen Clayton – Head of Corporate Services

Praxity Corporate Finance European Conference

shutterstock_148608140Last week in Brussels the PM+M Corporate Finance team linked up with colleagues from across Europe from the Praxity alliance of accounting firms. The meeting was focused on ensuring owner managed and SME clients get the same level of coordinated international service in corporate finance as larger corporate businesses.

The discussions covered issues such as:

  • The changing economic climate for owner-managed businesses across each country
  • The appetite of clients across Europe for acquisitions and disposals and the success of their plans
  • The differing attitudes of banks to finance deals and expansion across different countries
  • How the legal frameworks across Europe differed in terms of being able to control and complete acquisitions and fundraising exercises

The event strengthened ties between the advisers in different countries and improved everyone’s understanding of corporate finance markets across Europe. Our clients and professional network will benefit from our depth of knowledge and contact base whenever they look to do a transaction involving a European business. Particularly impressive features were the depth of understanding of the renewable energy sector in our Germany colleagues and the widespread knowledge across our European firms of engineering and manufacturing business transactions.

If you are thinking of doing a deal with someone based in a different European country, please get in touch with David Gorton for a free briefing on the likely issues and differences of deals in that country on either 01254 679131 or at david.gorton@pmm.co.uk.

 

PM+M Corporate Finance complete Management Buy-In at WS Rothband

shutterstock_242204359WS Rothband & Co. Limited, established in 1860 and supplier to the NHS for almost 70 years, has been acquired in a management buy-in led by Paul Dixon. Rothband has been developing protective equipment for radiology departments since the technology was introduced to the NHS.

The deal was funded by Seneca Partners and Rosebud Business Finance, and Tim Murphy, a director of Seneca Partners, will join the board at Rothband. Both Seneca and Paul Dixon are delighted with the acquisition, as they believe the market has huge potential for growth.

Paul Dixon commented: “One of the key factors in completing this acquisition and being able to successfully implement our growth plan, was always going to be finding the right team. Having worked with Jim previously I knew that he and PM+M were the right company to lead this venture and put together the right funding package.”

FW Capital and Ultimate Invoice Finance provided working capital to fund post-acquisition growth. Legal advice was provided to Seneca by Napthens and Taylors were legal advisers to Paul Dixon.

Jim Akrill, Corporate Finance Partner at PM+M, commented: “This was a challenging and complex deal to do but we were able to put together a funding package with a balanced mix of debt and equity which will allow the business to drive its exciting growth plans.”

For more information or advice on acquisitions, please contact Jim Akrill on 01254 679131 or by email at jim.akrill@pmm.co.uk.