Challenges and Opportunities going into 2009 - Mazars - Ireland

Interview with Enda Gunnell, Corporate Finance Partner of Mazars. Sunday Tribune Special Supplement, 02-Nov-2008

There are always people who thrive in a recession. In the area of Mergers & Acquisitions and Corporate finance there is plenty that businesses can do unless they have succumbed to negativity and panic as a result of messages in the media that may not even be relevant to them. Despite all this negativity there are owner- managers who keep their heads when all about them are losing theirs.

Their companies will acquire other businesses and greater market share, leading to net growth even in a shrinking market and will boom when the market returns to steady growth, as it inevitably will.

“For each business which will fail, there is an opportunity for another business to move to a stronger or more commanding position in their respective markets,” says Enda Gunnell, Corporate Finance Partner of Mazars. “When things are down there are opportunities for growth and when things turn (and they will), you grow with that”.

Rising out of market circumstance there will be consolidation opportunities. Some of them will be opportunistic in nature. But other opportunities will present out of necessity. There may well be certain market sectors which are suffering such as construction or distribution and wholesaling, where merging is a tactical move to ride out the storm together.

“Owner managers need to identify and benefit from synergies between previously independent businesses,” explains Enda Gunnell, Corporate Finance Partner of Mazars. “Pride and ego may get in the way of acknowledging the need to do this but in this climate there is no place for that” he continues.

Professional advice is needed to broker deals fairly so that every one benefits from the upturn when it comes and all parties can enter into a new partnership feeling that they have got a good deal out of a merger.

Further advice offered by Enda Gunnell, of Mazars is “To recognise that there may well be a need to do something and recognise that early.

“In my experience dealing with business owners, for most at the moment, business is slower; there’s no access to money from the bank and the future is uncertain. Business owners are cautious as to what 2009 will hold. Inaction in the current climate could be fatal.

“By taking action now you can best protect your business to ensure that you are around for the upturn when it comes.

“It’s not rocket science but you need a clear head and an ability to read what’s happening in your market place and an ability to identify the choices that you, as a business owner, have,” he adds.

It is clear that for those who are emotionally involved in the businesses they have built up (and who is not?) a third party perspective is crucial. A dispassionate view on the likely outcome of a strategy is hard to take when it’s not just your money and livelihood but that of your employees at stake. For most successful people a large part of their identity and life’s work is tied up in their businesses. In addition, a third party business advisor can take an overview and is likely to be able to see opportunities that a business owner on the ground would not. For those who question the helpfulness of third party advice, an initial meeting and consultation with a business advisor is usually free of charge, giving the owner manager an opportunity to decide whether they think engaging the advisor is going to pay dividends.

“The type of support needed is that which recognises that the business owners are the experts - but they need people with general business knowledge to take them through critical junctures, using the information that is available. At Mazars, we are seeing people who have been in business a long time, who we would have regarded as very strong, experiencing indecision through sheer weight of pressure. Their ability to make decisions is compromised. They need to be guided and supported. Knowing that third party advice is dispassionate and has the emotional connection to the business removed is great reassurance,” says Enda Gunnell of Mazars. “And a third party is willing to ask the hard questions.”

This whole era is going to be a new test for management and how we deal with this chalenge is going to be telling. It’s as though a generation who grew to maturity with a silver spoon in its mouth is on its own now. But growth and prosperity are still possible but can not be taken for granted anymore.

Sunday Tribune Special Supplement, 02-Nov-2008