Pre-pack administrations – vital rescue tool or creditor scam?

Posted by David Filmer Feb 21st, 2012, in Mergers and Acquisitions

With more and more businesses feeling the pinch in tricky economic times, companies are increasingly looking at ways of restructuring. One of the more controversial options in recent years has been so-called pre-packaged administrations, or ‘pre-packs’.

A pre-pack effectively entails a company being put into administration, and then its business or assets being sold very shortly thereafter pursuant to a pre-arranged deal. Recent examples include well known high street names such as Bonmarche, Blacks and La Senza

Benefits of pre-pack administrations

- Pre-packs are a quick, and relatively painless, way of rescuing an insolvent company. This in turn keeps insolvency costs to a minimum.

- Continuity of business – the operation of the business usually continues without much, if any, interruption, helping to preserve any goodwill and value in the business. (more…)

Let’s be positive to get deals done

Posted by David Filmer Jan 27th, 2012, in HD comment, Mergers and Acquisitions

We’re not out of January yet and already it would seem all those New Year’s resolutions we made to be more optimistic and positive have been broken.

January 16 was officially labelled Blue Monday (supposedly the most miserable day of the year) and it certainly felt like that as two leading economic forecasters, the Item Club and Centre for Economics and Business Research, gave downbeat predictions for economic growth. What’s the point?

The former went as far to say as it believed we were already in a ‘technical recession’ with GDP shrinking in the final quarter of 2011 and likely to contract again in the first three months of this year. Well thanks for ruining the mood.

While these organisations are well within their right to analyse the data, part of me can’t help wishing they would hold off giving their opinions until the official figures are released and we know the real picture. (more…)

Could heads of terms provide a roadmap for your business deal?

Posted by David Filmer Sep 12th, 2011, in Mergers and Acquisitions

A heads of terms document is used towards the start of a commercial transaction, and is used to set out the principle terms of agreement between the parties before substantive drafting takes place.

While, save in certain circumstances, heads of terms are non-binding, they may prove useful in bringing matters to a swift conclusion. Some of the main benefits of using heads of terms are considered below.

Giving a useful summary for all parties

Following negotiations between the principles involved in a deal, heads of terms may prove useful in summarising the key points of the deal to other members of the company. These can also be passed to your third party advisors, such as your solicitors and accountants, to assist in instructing them. (more…)

Could ‘deferred consideration’ help you get that deal done?

Posted by David Filmer Aug 5th, 2011, in Mergers and Acquisitions

With funding for acquisitions still being hard to come by, buyers are increasingly looking for ways to spread the cost.

Historically it was the norm for the full amount of consideration to be paid on completion of the deal, but it is now more usual to see a percentage paid up front, with further amounts being paid at a later stage.

The benefits of such arrangements are clear from a buyer’s perspective – it spreads the cost, which assists with cash flow, and may allow you to make a purchase which you otherwise would have passed on. However, for a seller, what incentive is there to agree to let a buyer delay payment? While not ideal, in a depressed economy this may be the only way that you can agree a deal. (more…)

Harrison Drury’s M&A team advises on NW hotel deal

Posted by Communications Director Jun 9th, 2011, in HD news, Mergers and Acquisitions

Manchester’s four-star Pinewood Hotel has been purchased by the owners of a Lake District hotel for an undisclosed sum.

The 58-bedroom Pinewood Hotel, situated near Wilmslow and Manchester Airport, has been acquired from Menzies Hotels by Pinewood on Wilmslow LLP, a partnership of the four directors from the Best Western Castle Green Hotel in Kendal.

The new owners, who were advised on the purchase by the mergers and acquisitions team at Harrison Drury Solicitors, have plans to further develop the site following the seven-figure deal and will rebrand the property to the Best Western Pinewood on Wilmslow.

Managing director Tim Rumney said the new management team is looking to identify further opportunities to improve the customer experience and financial performance of the business, and expects significant job creation through the growth of the team and longer-term development of the site. (more…)

Five common mistakes with joint ventures

Posted by David Filmer May 31st, 2011, in Mergers and Acquisitions

Working together with someone to bring something new to market is an exciting time for any business. However, in the rush it is easy to slip up and miss things which may come back to haunt you once the dust has settled. If you are thinking of entering into a joint venture, make sure that you don’t fall foul of any of these:

Documentation

As with any business situation, proper legal documentation is essential. Lawyers may sound like a broken record in this regard, but getting the legals right at the outset will save you time and money in the event that things don’t go to plan. Bear in mind that this potentially deprives the lawyers out of work and fees in the long run, so it must be good advice!

Ownership

Most joint ventures are conducted through a newly incorporated company or similar corporate entity. To that end, all of the assets, rights and property needed to make the JV work will need to be either transferred to the JV company, or the JV company must be given the right to use such assets in advance. Careful checks will need to be included to ensure that such ownership or usage is properly regulated on incorporation, during the life of the JV, and on dissolution. (more…)

Buying the assets of an insolvent company

Posted by David Filmer May 12th, 2011, in Mergers and Acquisitions

While the first few months of 2011 have provided some encouragement in terms of economic recovery, unfortunately there are still some businesses which have not been able to survive the recession, and have become insolvent.

For those more buoyant businesses, this may provide opportunities to snap up a bargain. There are, however, certain things to bear in mind when buying an insolvent company.

The Administrator

Usually where an insolvent company is available for sale, it will have gone into some form of administration, and as such it will be the administrator, and not the directors, who will be running the company. A prudent buyer should therefore take steps to ensure the administrator has been properly and validly appointed, either under the terms of the court order, or the security documentation. (more…)

The five golden rules of management buyouts

Posted by David Filmer Apr 20th, 2011, in Mergers and Acquisitions

Management buyouts (MBOs) are a good way to plan for succession when owners of a business are looking to take a step back, giving greater continuity to the business. For business owners in that position, here are some key issues to consider before, during, and after an MBO.

Preparation, preparation, preparation

MBOs can cause significant upheaval to a business, and anything which can be done to streamline the process is a bonus. Ideally, owners should be grooming their management team leading up to an MBO, from any time up to five years in advance. This would involve identifying relevant people with appropriate skills to take on the business, integrating them into the management of the business, and giving them significant exposure to the key contacts of the business, to ensure a smooth handover.

Financial Planning

The key to a clean MBO is getting the financials right. The exiting owners should consider what value they want to extract from the business, and how they want to get it, for example, a lump sum, an earn-out period, or other staged payments. (more…)

HD advise in historic Lancashire trout farm MBO

Posted by Communications Director Apr 12th, 2011, in Case studies, Mergers and Acquisitions

(Pictured L-R David Filmer of Harrison Drury Solicitors, with David Jones and Philip Mart)

A historic Lancashire trout farm is set for expansion after being purchased in a management buyout (MBO) for an undisclosed sum.

Dunsop Trout Farm, which was established at Dunsop Bridge, Clitheroe, in 1926, has been purchased by Philip Mart and David Jones from previous owners, the Birtwistle family.

Dunsop Trout Farm is one of the oldest in the UK and acts as a restocking farm for brown and rainbow trout, replenishing fish supplies in rivers and reservoirs used by angling clubs. The business has three employees.

Philip, who has been managing the farm since 2000, said: “We currently produce around 45 tonnes of fish annually for restocking, but we want to grow the business. As part of this buyout we are looking to increase production, as well as exploring other expansion opportunities including a smoking house and farm shop, which would allow us to move into retail too.”

Philip and David were advised on the purchase by the mergers and acquisitions team at Harrison Drury Solicitors. (more…)

Harrison Drury assists in joint venture between Preston poultry businesses

Posted by Communications Director Mar 2nd, 2011, in HD news, Mergers and Acquisitions

Experts from Harrison Drury have advised a Preston chicken processing company on a partnership with a local meat and poultry business.

The Champ Chicken Company Ltd, based at Longton, near Preston, has entered into a joint venture with Hen House (Wholesale) Ltd, a wholesale supplier of meat and poultry products.

The deal has seen former owners of Champ Chicken, John Singleton and Alan Orritt, pass the business to the next generation of their families, Nicola Singleton and Terence Orritt, who will remain directors of the business following the merger.

Peter Rayton, chairman, and Andrew McLaughlan, financial controller at Hen House, founded in 1990, say the partnership will significantly enhance the capabilities of both companies and will offer exciting new market opportunities. (more…)