Website to find acquisition targets

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A CORPORATE financier from Yorkshire is behind a newly launched website which seeks to help companies find suitable merger and acquisition opportunities through crowd-sourcing.

Director and majority shareholder James White said that Leeds-based MergerMuse will be of particular benefit to businesses with small acquisition targets as information on these firms can be difficult to find.

He said: “We believe that MergerMuse adds structure to the process of M&A target sourcing.

“Whilst solely relying on retained advisers and their contacts for suggesting acquisition opportunities may sometimes be appropriate, it becomes less effective when reviewing unquoted small, high-growth opportunities within young, fast-growing or niche sectors.

“Through MergerMuse acquirers can make their intentions known and incentivise industry experts to share their knowledge in areas in which retained advisers may be lacking.”

MergerMuse acts as a free billboard where European and United States-based companies can advertise their general acquisition or investment criteria. This allows potential targets or their advisers to search for potential acquirers or investors.

But the website also allows companies to offer finder’s fee type incentives to users who suggest suitable M&A opportunities. No commission is payable unless the suggested transaction completes and all contributions are anonymous.

MergerMuse takes 20 per cent of any finder’s fee paid, but it splits this with professional advisers who have referred acquirers.

Mr White claimed that MergerMuse marks the first time a website has combined online social media with traditional monetary incentives to help companies locate suitable corporate acquisition targets.

Mr White added: “If a company is reviewing acquisition opportunities it can normally be found out from their stated strategy, recent history of acquisitions or industry gossip, but often this information can be difficult to search for. Through using MergerMuse, potential targets and their advisers can easily search for potential acquirers when the time is right.”

It can be a challenge for acquirers to find information on small targets as those below a certain threshold only need to submit abbreviated accounts to Companies House. This means little information about the said company will be publicly available.

A company is deemed small if it meets two of the following conditions: its turnover is less than £6.5m; it has less than £3.26m on its balance sheet; it has fewer than 50 employees.

Mr White said: “Small companies in the UK benefit from reduced disclosure requirements when filing their annual accounts. This makes researching small companies very difficult as all you have is an out-of-date balance sheet and a marketing focused company website.

“It is easier for fast-growing companies supplying intangibles such as software and services to meet these criteria as they don’t have manufacturing assets.

“There are many companies looking for targets in these sectors so the lack of information on smaller potential targets is a real problem.”

Mr White said that Yorkshire has a considerable number of young fast-growing firms that are classified as small companies. He added: “By helping acquirers and targets locate each other we believe MergerMuse will create value for Yorkshire as a region.

“Acquirers find attractive targets at the right price, vendors receive more interest from acquirers and advisers benefit from higher deal activity.”

He added that there has been an increase in deal activity in Yorkshire since the start of the year.

“Growing optimism of a sustained recovery and higher share prices have given Yorkshire businesses the confidence to pursue their stated strategies, including Renew Holdings and Emis Group who both completed acquisitions in August.”

Leeds-based medical software firm Emis bought eyesight screening company Digital Healthcare for £3.1m as part of its plan to branch out into new areas of healthcare. Digital Healthcare screens people for diabetic retinopathy, damage to the retina caused by diabetes, which can lead to blindness if left unchecked.

Engineer Renew, which is also based in Leeds, said last month it would pay £7.9m for Lewis Civil Engineering.

suzan.uzel@ypn.co.uk