Mr Canham adds: "Buyers are saying they do not just want to rely on the indemnity and warranties. [They] want to identify the problems now.
“Where you have a business that has done a lot of DB transfers, the buyers are also factoring that into the price.”
On the sellers' side, conduct for claims clauses are now even more important, in a busy complaints environment.
“So you can be alerted if a claim arises and you can step in and try and manage that process," Mr Canham says
“It stops the buyer settling the claim to get rid of it and leaving the seller to underwrite the claims.”
Stuart Dyer, chairman of consultancy firm Soprano Mergers & Acquisitions says a good acquisition arises when the buyer is very clear about their business and operating model and their culture.
This means they can identify acquisitions that will fit with their business model and culture.
Mr Dyer says: “When you get that situation and there is an open dialogue between the businesses, that tends to give rise to solid and successful integration. The greater the clarity right from the outset, the more likely a successful transaction, and you won’t get a dispute at a later stage.”
Mr Rawal says: “Based on our experience, creating value in acquiring an adviser business is predicated on having the right platform of strategic, commercial and operating capabilities to integrate an advice business, the rigour and discipline of deal execution and post deal integration and robust and comprehensive due diligence that informs the right price and value expectations.
"We often see value being eroded because the buyers of advice businesses haven’t created a profitable operating platform that allows for easy integration and value realisation.”
Mr Dunning’s top tips on how due diligence when selling are that advisers should:
- Ensure all client engagements are all in good order
- Clients have been seen in the last 12 months and signed up to current terms
- Make sure they have the basics right. Where they own a company, they should make sure things like statutory registers are up to date and that they can prove ownership of the shares
- Make sure they can provide a good audit trail for all your compliance activities
- Demonstrate good levels of compliance and if there are any issues/complaints make sure they have good documentary evidence of how that was dealt with
He also says that advisers should start the due diligence earlier in the sale process.
And even where there is missing information, Mr Dunning says that advisers need to make sure they have presented the information in the best way possible, taking care to disclose any information within their knowledge.
