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The explosion of new lenders and intermediaries in the UK market over the last decade has driven competition, encouraged innovation and delivered huge choice for borrowers. However, as trading conditions tighten, funding remains difficult to secure and volumes shrink, the pressure on some companies may be too much to bear.

It is not so much that these businesses do not have a good trading model but rather they have not had time to establish themselves fully and make adequate provision for the more testing commercial environment.

House price inflation is steadily dropping and lending volumes have also begun to fall. Companies in a strong financial position will find opportunities in the coming months to buy those with weaker balance sheets and an over-reliance on immediate business volumes.

One of the priorities for Mortgage Intelligence over the next year will be keeping an eye open for businesses that would fit well into our operation and deliver profit and growth into the future. What will be the key considerations when it comes to making an acquisition? Brand is one of the first things that potential suitors will be looking for. How well known is the business? Does it have a good reputation? How loyal is its client base? The more established a business, the more potentially attractive it will be to an investor.

It is important that the business delivers the same service standards as the potential owner, as no buyer wants to dilute their own brand by teaming up with a mediocre business.

Buying failing businesses to turn them into well run, profit-making operations can prove difficult in a slowing market. The ability of the target company to generate revenue into the future will be central to any potential suitor, as will volume of business. Increasing volume would be an attraction but this needs to be put into perspective, whether it is a network, packager or broker that is up for sale.

How good is the current model? Is cashflow holding it back and is the buyer willing and able to address this? Buyers want to know how and when they will recoup their investment. They also want to know that what they see is what they get and the most attractive targets will have a relatively simple structure. Buying a business is difficult enough without having to unravel a corporate ball of wool.

Brand, culture, earning potential and structure will be central to those firms looking to acquire this year. Thereafter, striking the right deal for the right price and being able to introduce the right management structure will be the all-important factors.

Sally Laker is managing director of Mortgage Intelligence


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