Prism Publishes Research Report - 09-Dec-08
Prism Corporate Broking, the specialist business broker focussing on companies in the £0.5m to £10m turnover range, has produced a research report into Mergers & Acquisitions (M&A) in the mid market Information & Communication Technology (ICT) sector.
“Whilst there are plenty of data available concerning large, corporate transactions, we wanted to know more about activities with relevance to medium sized, owner managed businesses”, said Robert Fiske, Director of Corporate Finance at Prism. “We are increasingly developing a specialism in the ICT sector and commissioned Bax Interaction, a market research specialist from Cambridge, to carry out depth interviews with businesses owners", Robert explained.
Prism is making the results of this research freely available by offering copies in either PDF or printed versions (contact Prism for further info). The 10 page report summarises the drivers underlying business sales and acquisitions as well as looking at factors such as valuation expectations, deal structures and future acquisition plans.
“From the potential sellers’ perspective, one of our principal findings was the widespread perception that achieving “critical mass” is key to maximising attractiveness. It is clear that in this mid market space, growing beyond a certain size can be difficult – but is really important if one wants to maximise value on an exit”, explained Robert. “For someone whose exit horizon is still a few years away, they may want to consider an acquisition as a means to achieving “critical mass” more quickly. This is a tactic employed by some, recognising that organic growth can be extremely difficult to achieve, particularly in the current economic climate. Furthermore, valuations are subject to significant downward pressures at present which should mean that it is more of a buyers market."
In recent years cash has been the principal element of most deals in this particular space, with earn outs and deferred considerations typically representing minority components. In the current economic climate however, Prism concludes that the availability (and cost) of debt finance will mean that those wishing to sell should expect more heavily structured deals and less cash up front.
The report is available direct from Prism by calling 01638 743 123, emailing to ict@prismcorporatebroking.com or via its website: www.prismcorporatebroking.com/ict
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