Mergers and acquisitions are significant risk events for the buyer. Once the positive reasons for doing a deal are known, attention should turn to the risk factors associated with doing it. That is not to stifle business opportunities rather to be as knowledgeable as possible about the deliverable commercial opportunity and those tasked with its delivery. Statistics are comprehensively against acquisitions being of benefit to the buyer in even the short to mid-term.
Knowledge is power and we assist clients to profile the target company (and management if they are travelling with the deal) and to invest upfront in deeply understanding the opportunity and risks attached to it.
Spring Law has access to intelligence professionals who can lawfully acquire intelligence on people and target companies.
So much is passed on the internet but without professionals skilled in the art of locating it even open source information can lay undiscovered. We also use human intelligence to fill in the gaps to further understand the company and people who run it.
The process of due diligence requires the target company and management to tell the buyer about itself. There is of course an inherent weakness in relying for comfort on information from the target and those likely to benefit directly from the acquisition. Of course it is a commonly accepted practice and not entirely devoid of benefit – and the link to warranties in the acquisition document will give the buyer a recourse in damages if it can prove loss from misleading disclosures.
But strong intelligence fills the gap between what the company elects to disclose and third party sources. A credible acquisition strategy should lean on the all the available facts to inform its decision whether to proceed at all, or proceed but at a lesser price.
A Credible Acquisition Strategy
It is true there is a cost to bridging the information gap, but the cost of being misinformed and proceeding with the wrong deal will always be more.