BusinessWings quizzed corporate finance expert Tom Ferns about business past, business present and the future growth of the green energy economy.
Ferns, who oversees mergers and acquisitions, among other things, for commercial law firm Rosenblatt, advises sellers to plan well in advance and suggests where deals are likely to come from in the mid market (businesses with revenues exceeding £1m).
Sally Grant: It’s generally accepted that the downturn is likely to last through 2009 and beyond – will 2009 usher in a new phase?
Tom Ferns: This year will be a tough market, but there will be opportunities generated.
You've got to decide 12-18 months in advance of selling your business that you'reputting it on the market
Tom Ferns, Rosenblatts
Rosenblatt differs from a lot of firms, because of our size – we’re light of foot, enabling us to react quickly and do things that other firms with bureaucratic processes take much longer to get through.
We have an entrepreneurial client base, and we’re entrepreneurial as a firm.
SG: When is a good time to sell a business?
TF: In the current market, when someone wants to buy it!
You’ve got to decide 12-18 months in advance to get to the end position.
By talking to your lawyer and accountant early on, you can get all contracts, legals and financials in order.
By showing visibility on cash flow and suchlike you not only make it easier from a buyer’s perspective, but you also present your business as healthy.
SG: Are sellers becoming more negotiable on price?
TF: One of the difficulties in the past was that sellers of good companies had unrealistic views on valuation.
Although it will be a tougher market for sellers of business, they are becoming much more realistic, aware that there are fewer buyers out there.
This will create deals – sellers with realistic views on valuation will find buyers and do the deal quickly.
SG: What do you see as the most common deals for 2009?
TF: More businesses will need to do deals to survive. There’ll be a lot of these sorts of deals in the mid market.
We have many listed clients who’ll generate deals through acquiring other businesses. Deals will also be generated by firms looking to recapitalise.
SG: Which area of the market will suffer the most?
TF: The capital market will continue to be difficult for most people and their businesses; it won’t be coming back during 2009 at all.
It will continue to be difficult to raise money on the stock exchange, and we don’t see that particular market coming back for 12 to 18 months.
