Corporate Finance & Transactions

Corporate finance and transaction decisions often depend on a combination of financial information, commercial objectives, ownership arrangements, timing and the requirements that apply to the transaction. Where a company-law step is involved, the governing provisions are those of the Companies Act 2016 as administered by SSM. A headline valuation or a single financial model rarely answers every question that directors, shareholders or counterparties need to consider.

When transaction support may be relevant

Support may be relevant when a business is considering an acquisition, disposal, investment, shareholder arrangement, financing decision, group reorganisation or another corporate exercise. The purpose of the work and the intended users of the output should be clear at the outset.

A transaction may also raise accounting, tax, legal, regulatory, funding and governance questions. Those matters should be identified early, because they can affect the information required and the decisions that follow.

The purpose of the work determines the analysis

There is no single form of transaction analysis. Work prepared to inform an internal board decision, to support a negotiation, to satisfy a lender, to assist a shareholder dispute or to accompany a regulatory filing may each require different scope, different evidence and different limitations — and the same figures can be inappropriate if carried between purposes.

Before analysis begins it should be clear who will rely on it, for what decision, at what date, and what would change the conclusion. Where a value, projection or financial position is being considered, the basis of preparation, assumptions, sensitivities and limitations need to be visible rather than embedded in a spreadsheet.

Where the transaction affects the group's reporting perimeter — for example where an acquisition brings an entity within a consolidation, or where a new investor changes whether an entity remains a private entity for reporting purposes — the financial reporting consequences should be identified before completion rather than discovered afterwards. Which framework then applies is considered under accounting and financial reporting, and any resulting audit requirement under audit and assurance.

Start with the decision and the available evidence

A disciplined assessment begins with the transaction structure, the parties involved, the relevant financial information, assumptions, forecast horizon, contractual terms and timetable. The reliability and intended use of any financial information or analysis should be considered before it is relied upon.

How a scoped engagement may help

Depending on the circumstances and agreed terms, corporate finance and transaction support may include:

• clarifying the transaction objective, decision-makers and information needed;
• reviewing financial information, assumptions and areas that require further investigation;
• considering financial-reporting, tax or governance questions that may affect the proposed structure;
• helping management organise financial information for discussion with advisers, investors, lenders or other stakeholders; and
• identifying where additional legal, tax, valuation or other specialist input may be required.

The scope should reflect the transaction concerned. It does not amount to a legal opinion, investment recommendation, fairness opinion, guarantee of value or confirmation that a transaction should proceed.

Judgement, assumptions and specialist input

Transaction work is often judgement-heavy. The facts may change as diligence progresses, negotiations develop or new information becomes available. Assumptions, dependencies and unresolved matters should therefore be recorded clearly rather than presented as settled conclusions.

Where a matter requires legal, tax, regulatory, valuation or other specialist advice, that work should be separately scoped with the appropriate adviser. Where a transaction forms part of a recovery or restructuring, the available statutory routes are covered under corporate restructuring and recovery. Certain transactions may also engage requirements administered by other authorities, and those should be identified early because they can affect both timetable and structure.

Discussing a proposed transaction

Saifudin & Co can discuss the transaction, parties, timetable, available financial information and the decision that needs to be supported. Any engagement, deliverables and limitations must be considered from those facts and agreed separately.

This page provides general information only. It is not investment, legal, tax or transaction advice, and it does not determine the value, fairness, feasibility or outcome of a particular transaction.