Private and public company mergers and acquisitions are an important part of the business in Australia. When executed well, they can help a firm achieve its goals, become more competitive, and give its founders value for their hard work.
This guide will shed light on the Australian business landscape concerning Business Acquisition, Mergers & Sales. We touch on the laws guiding this type of transaction and share some tips on how to approach it for success.
Aussie Laws Concerning Business Acquisitions, Merger & Sales
Australian laws regarding business mergers, sales and acquisitions are found under the Consumer Act 2010, enforced by the Australian Competition and Consumer Commission (ACCC). Though not a strict requirement, private and public businesses should notify the commission of an impending merger. This is to avoid inadvertently breaching competition rules outlined in Section 50 and 50A of the Act and other guidelines.
One thing you should know about Australian competition laws regarding mergers is the issue of transfer of property and shares. The Act does give a lot of weight to the transfer of property or shares and their effect on competition. All businesses approaching mergers and sales/acquisitions should follow the various guidelines provided by the ACCC. Klear Picture SMSF specialists offer comprehensive advisory services to Australian businesses exploring potential mergers, sales, or acquisitions.
It is important to outsource transactions related to mergers and acquisitions to an external consulting firm with a deep understanding of the laws and guidelines governing the undertakings. Working with such a firm will help your company to avoid costly mistakes along the way. Foreign buyers should especially seek advisory services since there are special rules they must follow when they want to do business in Australia.
Make the Best Out of Your Merger, Sale or Acquisition
Here are some of the things to keep in mind when approaching a business sale, acquisition, or merger in Australia.
Plan the Overall Operations
Don’t rush. There is no harm in taking time to plan your merger or business sale meticulously. Expert acquisition consultants will tell you just how important it is to make a checklist of all the things you need to research the company in question.
Mergers can make or break your business. For instance, buying a loss-making business may create problems for your healthy business.
Here are some of the things you should find out about the company you want to acquire or merge with:
- Financials – Do the numbers match up?
- Assets – What will you be taking over or inheriting from the other party?
- Staffing– What are the implications of the sale, acquisition, or merger on current staff? This can be a significant problematic area, especially where workers would be made redundant after the merger or acquisition. There are various Australian laws that safeguard workers from being retrenched as a result of such occurrences.
- Branding – What would be the relevance and impact of the merger or acquisition of your brand?
- Competition – How would you avoid creating unfair competition through the merger or acquisition?
There is a lot more that you need to consider during the planning stage before you move ahead. Contact a mergers and acquisition consulting firm for advice on how to handle the transaction.
How Will the Merger/Acquisition Affect Your Cashflow?
Think of the running costs that will result from the transaction. Many businesses are baited into entering into a merger or acquisition based on the current performance of the other party. This is one of the worst mistakes you can make.
Look at the costs associated with running the business and measure them up with your current financial status. How will the running cost affect your cashflows going forward?
How to Approach Staffing Challenges
Majority of non-performing mergers and big-profile acquisitions in Australia have an issue with staffing. Mergers and acquisitions can lead to a lot of chaos in the workforce, if not managed well. You can lose key staff, have devastating culture mismatches, and even experience low productivity at the teething stages.
You should plan for all these shocks with HR when approaching a merger or acquisition. Have in place a robust staff integration plan, including appropriate organizational structure, training, new hires, compensation plans, etc.
Handling mergers and acquisitions in Australia can be quite challenging. This is why it is important to plan well ahead of time. However, the best option would be to hire a competent M&A consulting firm to help you navigate the challenging transactions and ensure you don’t break Australian laws.