Mergers and Acquisitions Key to Easing
Recessional Pressure
22 September 2009
Smart firms should consider mergers or acquisitions in order
to reposition themselves for the vast amount of new, post-recession business to
come.
Harry Parkinson, Managing Director of Close Invoice Finance in Ireland, part
of the FTSE 250 merchant bank, Close Brothers plc, believes that merger and
acquisition opportunities undoubtedly exist for businesses in all sectors to
exploit the present conditions and plan strategically for the future.
“It’s healthy for the economy that this kind of activity takes
place, as it encourages and improves the flow of money, helps prime the
employment market and creates conditions which facilitate a faster easing of
recessional pressures,” he said.
“A merger or acquisition must make economic sense for both parties, and a
successful merger will not only improve the potential for two businesses,
but will create a new entity than is stronger and more competitive.”
There has been some serious activity in global markets in recent weeks with
Kraft Food making a bid for Cadbury; Disney purchasing Marvel and in the UK,
T-Mobile and Orange and Harry Parkinson predicts that Northern Ireland is going
to follow suit.
“Now is the time for SMEs here to solidify future business through
mergers and acquisitions,” he said. “In preparation for such a move,
smoothing your company’s cash flow is vital. However, getting an appropriate
loan at a competitive rate from your bank may prove difficult. This is where
invoice finance comes into its own.”
Put simply, invoice finance releases cash tied up in your sales ledger – in
some cases up to 95 per cent of the worth of unpaid bills.
Mr Parkinson added;
“Invoice finance achieves two things in such a situation; firstly it
gives the company the confidence to pursue their corporate goals and
secondly it gives banks an assurance that sufficient funds are available to
meet debt repayments.”
“So the starting point is a consistent cash flow position, which invoice
finance can easily facilitate. Companies experiencing on-going sales success
in the recession are then in an excellent position to take advantage of
merger and acquisition opportunities. From the ashes of the downturn will
emerge a number of stronger, more dynamic firms.”
