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Thu 13th September 2007
Transactional Advice

Good Transactional legal advice is no longer the preserve of City Lawyers As John Thelwall from Park Woodfine Heald Mellows LLP explains

Traditionally City firms, and their large regional counterparts have been the automatic choice of advisor in corporate transactions, even at the smaller end of the market.

Times are changing.  There are provincial firms, like ours, with all the specialist skills required to provide comprehensive due diligence investigation, coupled with the experience to guide clients through complex and sophisticated transactions.  These firms are themselves multi-million pound turnover businesses, but because of their smaller size, partners are not detached from the day to day running of those businesses.  They therefore bring that hands on knowledge, as well as understanding their client's commercial aims, to business acquisitions.  They offer a significant advantage in terms of value for money. 

Clear understanding of a client's aims is key to concluding their deal on time and on budget, in line with their expectations.  The intentions of a trade buyer differ from those of a VC investor funding, for example, an MBI, which again differs from an empire builder's. 

Those aims dictate whether the buyer will want a longer term involvement in the business by the seller.  A trade buyer may want little or none because he is buying market share or turnover.  A VC will want a medium term, four to six year, management commitment.  An empire builder perhaps one to two years.  These requirements will follow through into the funding needs of the buyer.  The trade buyer may well want to make a one off payment funded in part by the target through a whitewash operation.  The empire builder, looking for a short to medium term retention of the seller, will usually pay in tranches, the up front payment being followed by one or two earn-out payments.  His funding will probably be from cash reserves or permitted lending.  A VC will also have the funding, often borrowed, for an initial payment, but because the profit will come from an eventual sale, he will expect to use the income generated by target to fund the medium to long term servicing of the borrowing. 

There has been a great deal of activity in the acquisitions market recently.  It remains to be seen whether the present "shut for business" signs hanging out at merchant banks, that have been funding private equity deals, will feed down to the direct funding of smaller transactions.  Whilst the bid premium has of course never directly affected such deals, general lack of confidence felt by banks may do so. 

The challenges for clients looking for acquisitions now in the Bedfordshire/ Northamptonshire area are likely to be two fold.  The first is that if High Street Banks at regional and local level begin to reflect the concerns of merchant banking divisions, funding may become a serious problem. 

Second, many owner managers intend to continue until retirement and don't perceive that they are in the market to sell.  If there is less funding available, values will be squeezed and they will be even less inclined to consider offers. 

The challenge is really one of supply and demand; however there are a few corporate finance businesses that are active in the market looking for acquisition targets. 

 

 

 

Park Woodfine Heald Mellows LLP

Park Woodfine Heald Mellows (PWHM) LLP was established in March 2007, a merger of Park Woodfine and Heald Mellows law firms.  Both firms were most recently based in the Bedford and Northamptonshire areas. 

Heald has existed in various forms since 1800.  Park Woodfine was established in 1966 and rapidly grew into one of the leading law firms in Bedfordshire and South Northamptonshire.

In 2004, Heald merged with Mellows of Bedford in June, with the addition of two partners and other staff. The Bedford office was subsequently known as 'Heald Mellows solicitors' to reflect the merger.

Park Woodfine became Park Woodfine LLP on 1st April 2006, retaining "Park Woodfine" as its trading name and in July 2006, Heald became Heald Mellows Solicitors a limited liability partnership based in Bedford.

At PWHM there are currently 10 Partners, 24 fee earners and a total staff in excess of 90. There is a good balance between maturity and youth within the firm.

PWHM have teams specialising in: Commercial Law, Family Law, Charity Law, Wills, Trusts and Probate Law, Property Law, Personal Injury Law, and Medical Accident Law. 

For further information, please contact:

Paul J Westerman, Head of Marketing

Park Woodfine Heald Mellows LLP

Tel: 01234 400 000

Email: pwesterman@pwhmllp.com

web: www.pwhmllp.com