The UK is expected to be in a recession until summer 2023. For several months, fears of a recession have led investors to place more emphasis on identifying M&A risk factors early. More than ever, investors are keen to put their money into businesses with healthy fundamentals that can weather economic shocks with a solid proposition and strong technological capabilities.
The M&A Balancing Act: Seizing Opportunities and Assessing Risk
In times of economic difficulty, some investors are inclined to rush through the M&A process, grabbing businesses that are “on sale”. In 2008, the average deal time from announcement to completion was just 80 days. This is almost half the average deal time compared to the previous year.
Unfortunately, in some organisations, in-depth due diligence procedures were sidelined in favour of a ‘seize the opportunity’ attitude. While seizing opportunities quickly sometimes pays off, either in the form of a favourable valuation or the evasion of a competing bid, it exposes companies to significant risks.
So, how can companies ensure that opportunities are seized without too much risk exposure?
Speed and Depth: Onefourzero’s Recession Toolkit
The onefourzero recession toolkit comprises several thorough, low-latency diligence services: a snapshot report, early-stage diligence report, technology and IT due diligence and commercial due diligence, allowing for scalable solutions throughout the M&A process.
To learn more about a sector or asset…
Commission a snapshot report. Onefourzero’s snapshot report gives a fast but robust overview of a sector or asset, delivered in three days. The snapshot report is especially useful pre-approach, giving your firm a valuable glimpse into the market of interest. The report provides comfort around an asset or identifies areas for a deeper dive.
Commission an early-stage diligence report. Before instigating a formal process, you may want to learn more about a particular asset’s commercial performance. An early-stage diligence report can be serviced entirely without access to the company and provides an outside-in review of an asset’s commercial performance compared to the sector overall and specific competitors.
For a deeper dive…
Commission technology and IT due diligence. All companies, whether on the buy or sell side, should conduct technology and IT due diligence during the M&A process. Onefourzero’s technology and IT diligence process involves in-depth management interviews and a review of all documentation. Once our team of expert consultants have explored the firm’s cybersecurity, risk and compliance management and IT infrastructure and architecture, we will produce a clear red flag and opportunity rating. You can learn more about our technology and IT due diligence approach here.
Commission full commercial due diligence. Firms seeking a full assessment of a target asset should commission a full commercial due diligence on the buy or sell side. This process combines company access, data room content and vital outside-in data from over 1,500 sources to deliver a comprehensive assessment of several business areas. These areas include commercial performance, sales and marketing performance, marketing share and demand, customer cohorts and loyalty, sentiment and reputation, headroom and growth, technology and IT capabilities, and more.
For companies not looking to invest in assets right now but rather focus on their own firms’ performance, onefourzero offers various services that will help cement value.
Many firms will be looking to focus on value creation as the recession starts to bite. A data and tech-led value creation strategy is increasingly a non-negotiable requirement for businesses. Technology is the most scalable tool for creating true value today—but knowing where to start may be challenging.
Consulting with investors, portfolio companies and individual brands, onefourzero delivers strategies to create tangible commercial value for clients. Our value creation services span digital transformation, IT and technical consulting, data maturity audits and commercial headroom modelling. You can find out more about our extensive value creation services here.
Leveraging analytics is vital for businesses across sectors. Onefourzero’s one-stop, self-service data solution, threesixty, allows firms to access a wide selection of key data, including:
- Market size, growth and share
- Marketing efficiencies and positioning
- Engagement and user experience
- Commercial performance and benchmarking
- Customer cohorts and sentiment
- Sales, pricing and conversion
There are several dashboard packages available to suit all organisations. Plus, you can include add-on enhancements in your chosen package, such as engagement and user behaviour mapping, access to the originations engine and other custom enhancements. You can learn more about threesixty here.
Investors today are keen to put their money into businesses with a healthy balance sheet that can handle economic shocks with a solid value proposition. Utilising onefourzero’s recession toolkit, which comprises diligence services, value creation services and our threesixty one-stop data solution, will put your firm on solid footing when the recession hits.
If you’re interested in learning more about our services, please don’t hesitate to contact the onefourzero team.