There are a lot of factors involved in a successful merger and acquisition transaction –everything from the state of the market, how other, comparable, transactions have fared, the long-term outlook for the sector, company contracts, competition: the listis all-encompassing. One of the biggest factors, though, is the company's finances. In this article, we will explain why these are so important, and what you can do to make sure that yours are as good as they can be.


First, what are high-quality financials?

Financial reports can vary in quality –at the low end you have poorly maintained records with no auditing, and even deliberately misleading figures, and at the high end you have accounts based on established standard reporting techniques, audited or prepared by a reputable expert. The key difference is in the usefulness of the data –can reasonable expectations be set and decisions made based on reliable information in the reports? If so, they are deemed to be of a high quality.

Buy-side due diligence

Your buyer will want to conduct extensive ‘due diligence’ before they commit to the purchase of your business. This is the process in which every element of your business is studied –your assets, liabilities, contracts, employees, competition, growth plans, etc. Your finance will be scrutinized more than anything else –after all, this is where your dollars and cents are documents, and that is what the buyer is ultimately interested in. High quality financial reports will enable your buyer to get an accurate and reliable picture of the financial state of the company, and thus be able to make an offer that is based on a clear sense of the truth.

Faster transaction closing

As a follow-on from the buyer due-diligence, the higher the quality of your financial reporting, the faster your deal can close. The due diligence phase of the M & A activity can take months, depending on the complexity of your business –and this can be cut short simply by having clear, concise and trustworthy financial documentation. Your buyer will be able to more quickly assess the value of the business and how much it is worth to them, which brings them closer to making an offer. Why does this matter? A long-drawn out process that ends in no offer being made (or an unsatisfactory offer) is time wasted –you want a prospective buyer to quickly make a decision, so that you can either agree to terms or move on to the next interested party.

Pinnacle Pharmacy Group

At Pinnacle Pharmacy Group, we have helped many digital health and pharmacy businesses to navigate through the mergers and acquisitions process, and we have the expertise and experience to make sure that your business is presented to potential buyers in the best possible light.