Why finance leaders must assess customs exposure to protect valuation, avoid hidden liabilities, and uncover post-deal cash returns.

In M&A, your focus as a finance leader is on valuations, liabilities, and synergy opportunities. But one critical area is often overlooked – and it could quietly undermine your deal: customs risk and opportunity. Rarely addressed in standard due diligence, customs issues can significantly affect deal value. From hidden liabilities that emerge post-completion to reclaim opportunities that deliver immediate ROI, the customs position of your target business should not be an afterthought.

Why Customs Risk Belongs in M&A Finance

Customs exposures don’t disappear after a deal closes. If unaddressed, they can:

  • Erode deal value
  • Trigger post-transaction disputes
  • Attract HMRC penalties and audits

Conversely, overlooked opportunities such as overpaid import duties or unclaimed reliefs can generate immediate financial returns from day one of ownership.

Would you proceed with a deal without knowing whether you’re buying a future liability – or unlocking a hidden cash flow benefit?

The Risk vs Reward: Contingent Liabilities or Immediate ROI

While tax and legal risks are well covered in due diligence, customs liabilities

While tax, legal, and accounting risks are typically covered in due diligence, customs are frequently missed leaving finance teams exposed.

Key Customs Risks

  • Regulatory non-compliance: Incorrect tariff codes, undervaluations, or invalid Free Trade Agreement (FTA) claims can lead to retrospective duty demands and fines.
  • HMRC scrutiny: Since Brexit, HMRC audits have increased by over 35%, raising the likelihood of post-deal enforcement.
  • Contingent liabilities: Buyers may unknowingly absorb millions in future customs charges if legacy risks aren’t identified pre-transaction. 

Untapped Customs Opportunities: 

  • Customs duty reclaims – Many companies routinely overpay import duties. These can be recovered going back up to three years — often yielding six-figure cash returns.
  • Inward Processing Relief (IPR) – Allows duty and VAT-free importation of goods that are processed and re-exported, reducing landed costs.
  • Customs warehousing – Defers duty and VAT, improving cash flow and reducing cost of goods sold.

How Barbourne Brook Supports M&A Finance Teams

We help finance leaders build customs into the M&A process — not as an afterthought but as a key value driver.

  • Pre-transaction risk analysis: Identify liabilities and reclaim opportunities before completion.
  • SPA structuring support: Provide data to inform warranties, indemnities, and purchase price adjustments.
  • Reclaim validation: Quantify and recover overpaid duty to deliver immediate post-deal returns.
  • Audit readiness: Ensure the target’s customs processes can withstand HMRC scrutiny post-acquisition.

This enables finance teams to adjust valuations, protect against downside risk, and capture upside potential.

Real-World Impact

Case Study 1: £356k Immediate ROI

In a recent manufacturing sector deal, our review identified £356,000 in overpaid customs duty due to misclassified raw materials. The buyer recovered this post-transaction – delivering immediate cash to the bottom line.  

Case Study 2:  Avoiding a £1.2m Duty Liability 

During the acquisition of a retail group, we discovered the target could not evidence its FTA claims – exposing the buyer to a £1.2 million retrospective duty risk. This insight led to renegotiated terms and protected deal value.

What This Means for Finance Leaders

Incorporating customs into your M&A toolkit helps you:

  • Strengthen deal models by including realistic customs risk/reward scenarios. 
  • Improve negotiation positions with concrete data-backed insights. 
  • Avoid post-deal surprises that damage ROI and relationships.
  • Protect EBITDA and valuation from unforeseen customs liabilities.

The Next Step: Secure The Value of Your Transaction 

At Barbourne Brook, we partner with M&A finance teams to make customs due diligence a standard part of your transaction playbook. Our rapid review process — often completed in under a week — delivers actionable insights that protect and enhance deal value.

If your next acquisition or disposal involves cross-border trade, can you afford not to ask the customs question?

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