AFG looks at MA with due diligence

Richard J Smith.
Richard J Smith.

The Automotive Focus Group’s (AFG) information session in September was billed as “Business Valuation for Dummies, Positioning and Preparing your Company for a Successful Exit.”

The meeting was held in the Holiday Inn Auditorium and was addressed by Richard J Smith, the Head of Corporate Finance for Tractus (Thailand), who has been working in Thailand for almost 30 years, so is in a unique position of understanding the MA (mergers and acquisitions) in the local marketplace.

With second and third generations of Thai families he pointed out the scions may wish to join the elites, rather than continuing to work in the industry which may not be a glamorous one. He mentioned the fact that for Thai family businesses, selling it could produce a loss of face for the family. Richard understands the Thai psychology.

He went through the different (and difficult) factors in valuating any company, mentioning that any business that isn’t growing is dying.

Predictors of future worth were numerous, but track records were the best.

Key valuation methodologies were explored and the differences between owner operators and public companies were looked at, with there being great individual concepts that must be addressed by anyone looking at a merger or acquisition.

Due diligence is one of the important factors, where at corporate levels, you are inviting lawyers and accountants to dissect your business. This can take many months and he pointed out that 90 percent of sales fail at this point.

To those in the AFG who may be contemplating selling, he stressed again that they should carry out due diligence on themselves and clear up any ‘grey’ areas before the purchaser does, and be prepared to weather endless delays. Buying or selling is not a shake hands deal over lunch.

You can get more information on the AFG from the President Frank Holzer by email [email protected]