Category Archives: Corporate Finance

SME Values On The Rise

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Recent data indicates that multiples being paid for SME businesses is increasing. Clearly this includes a large range of deal sizes and different industry sectors, but this is excellent news for business owners considering their exit options. The Small and Medium Enterprises Valuation Index issued by the UK200 Group indicates the mean P/E (Price / Earnings) multiple was 9.6 at November 2015 compared to 7.3 at November 2014.

Achieving a successful disposal requires planning to ensure the business is well positioned to achieve its full value. In general the longer the length of time available to plan for a sale, the better the outcome. There are however a number of areas within a business which may only require a few simple changes, that in turn lead to a significant increase in the value achieved on a sale.

Expert advice should be obtained on the areas to consider when there is a relatively short amount of time available before selling. These simple changes can increase the overall value of the business without impacting on the day to day operations. When you consider that many businesses sell on the basis of a profitable multiple, a £1 increase in after tax profit equates to an increase in potential value of £9.60 based upon the above P/E average.

There are currently many trade buyers with cash resources, who are looking to make acquisitions. Furthermore there are debt and equity providers with funds that require lending and investing. The combination of these are leading to more potential buyers and so if you are thinking about your exit strategy, my advice is…

Get on with it.

Tim Mills – Corporate Finance Partner

Family businesses often give rise to issues and opportunities not found in other companies. The PM+M Corporate Finance team are hosting a seminar to provide you with valuable information and simple, adaptable methods to increase the value of your business, whilst overcoming family and non-family issues.

Date: Wednesday 20 April 2016
Time: 8am – 9am (breakfast will be included)
Venue: PM+M, Greenbank Technology Park, Challenge Way, Blackburn, BB1 5QB

To book a place on this seminar, please email seminars@pmm.co.uk or call the Marketing team on 01254 679131.

Funding – A Changing Landscape

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Many of us are aware that the funding landscape is changing. There are a now a wide number of funding options and providers. However, the landscape related article below demonstrates the propensity to raise funds even when the personal financial return is non-existent.

Click to read the full article

The people who have contributed to the crowdfunding platform will probably see no financial return on their investment, but the required funds were raised in a very short time. So what does this tell us about raising finance in the current economic climate?

Firstly, there are clearly funds available for investment. Secondly, the return on investment does not necessarily have to be in financial terms. The simplicity in being able to directly raise funds from a variety of investors, means that any proposition can be put forward, even buying a beach!

Crowdfunding continues to grow in popularity and opportunities like the one above will only add to this. Raising this level of funding for an opportunity that will deliver no obvious financial return to the investors means that those crazy projects with the potential to be profitable should not be dismissed. It may not be possible to raise funds through traditional routes for many opportunities but crowdfunding may provide the initial investment that is required.

Traditional funding options such as the banks and private equity funds will continue to have a large part to play in the finance requirements of businesses and individuals. However, when the opportunity is a bit too quirky or lacking the level of return required by commercial institutions, then why not think out of the box. It can’t do you any harm and it may mean that you end up with a small part of your very own private beach somewhere!

Tim Mills – Corporate Finance Partner

It’s manufacturing, but not as we know it!

3D Widget Printing

I have written blogs and articles before on the advance of 3D printing and what it could mean for manufacturing in all kinds of sectors. The new Airbus A350 XWB (unveiled last year) has about 1,000 3D printed components. 3D printing is clearly no longer a novelty manufacturing process and it has the potential to transform the aerospace industry supply chain and cost structure, producing lighter parts faster with less waste. Currently, the components are mostly widgets and brackets, small routine parts rather than large structures. The size of the part is limited by the size of the printer so it is difficult to imagine a machine large enough to make an airframe, but wider applications seem to be a distinct short term possibility.

But clock the latest advances. Scientists in the US have been using 3D printing to create living body parts with sections of bone, muscle and cartilage all functioning normally when implanted into animals. Move over Dr Frankenstein!!

Seriously though, this technology has the potential to disrupt many industries and there is significant funding being made available in the sector. Rosebud Finance and the North West Fund have recently invested additional money in an East Lancashire business to finance its rapid growth. It seems the possibilities are only limited by the boundaries of imagination.

If you are thinking of investing in new technologies and need pointing in the direction of funding, then give one of the Corporate Finance team a call on 01254 679131 and ask to speak to Jim Akrill or Tim Mills or contact me directly at jim.akrill@pmm.co.uk.

Jim Akrill – Corporate Finance Partner

Management Buy Outs – Are You Ready To Own The Business?

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I have advised on a wide variety of management buy outs.  They are without doubt an excellent opportunity for the current business owners to achieve an exit without the potential headaches of selling to an external buyer, whilst allowing a management team to become the owners of a business which they have helped to develop and grow. However, being part of an MBO team requires a certain mind set if it is to be a success.

The transition from employee to business owner is for many a leap that is taken with little hesitation, but for some it can prove difficult to make the necessary adjustments. There are a different set of pressures that come with owning a business to those of being an employee and for some, these can prove to be overwhelming.

It is essential to develop and support the management team prior to the buy-out process commencing. This can be provided by the vendors or external advisers and should provide the team with the fundamental skills they need to become successful owners, whilst giving comfort to the vendors that the management team include the right people who are ready for this new responsibility.

Being a business owner can bring great challenges but it can also provide great rewards. So when the possibility of an MBO arises, do not shy away or dismiss it, just take time consider all of the implications. Discussing the opportunity with third parties who have been involved in MBOs will ensure that both the management team and the vendors are prepared for what lies ahead.

Tim Mills – Corporate Finance Partner 

Dave The Dog

IMG_1704I have a dog, Dave. He has been part of the family since last summer when my wife and two sons convinced me that having a dog would be a good idea. Now, we have discovered that Dave likes a challenge, trying to escape from an increasingly more secure back garden. He does not give up just because we have increased the height of the fencing or reinforced the ground; he spends his time searching for potential weak spots we may have missed. Watching him carefully inspect the new perimeter in the garden made me think of the determination he has in trying to escape.

This ‘never give up’ attitude is also a key characteristic of many business owners. They all have a driving ambition to achieve certain goals and set new ones when these have been fulfilled. The issue many business owners have is setting the goals as part of an overall strategy. Individual owners often have nobody they can discuss matters with and even where there is a team discussing and agreeing strategy can be low on the ‘to do list’.

However, talking with team members or external parties is a key part of being able to bring individual plans, ideas and thoughts together in a strategy.  I would advise that spending time on business strategy is time well spent. You will find that most people are willing to listen and share their thoughts and advice, even if it is just providing feedback on your ‘crazy plans’.

I am currently advising a number of businesses that have long term goals but are unsure how to achieve them. The owners have engaged me to be part of regular meetings to map out the strategy for their businesses. This has proven to be very beneficial as it gives them fixed diary dates that are dedicated to focusing on developing opportunities that move them along the path of their long term plans.

You see if Dave could talk and asked me how to get out of the garden I could tell him that learning to climb a few feet up a tree would lead him to freedom. However, dogs can’t talk but business owners have no such excuse.

Tim Mills – Corporate Finance Partner

There’s No Place Like Home

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It’s fantastic to see a local business grow to a huge size and still stay loyal to its geographical roots. Euro Garages began its life in sunny Blackburn and is still in sunny Blackburn, having resisted any temptation to move to the bright lights of the big city. It is by no means the only example though, with Daisy Telecom still based in even sunnier Nelson.

Both companies have put acquisitions at the heart of their growth strategy and have shown how to make them work. The gloomy statistics put out about how something like 50% of acquisitions fail to deliver the hoped for value just show how important it is to get things right.

Firstly, both these companies have a clear strategy which makes the decision about what to buy and whether it is worth buying much easier. Woolly thinking destroys value.

Secondly, they have a tried and tested business model into which they can integrate their acquisitions to maximum benefit.

Thirdly, they have secured external equity investment in one form or another to fuel their growth plans. The expected increase in value outweighs the proportion of ownership relinquished.

But you don’t have to be a Daisy or a Euro Garages to make acquisitions work for you. SMEs can also play this game. Have a clear growth strategy. Be positive about how you are going to integrate your acquisition and make it happen. Don’t be afraid of external investment.

Finally, get help. PM+M Corporate Finance have the experience and contacts to help you drive your growth ambitions. For more information, contact Jim Akrill (jim.akrill@pmm.co.uk or 01254 604353) or Tim Mills (tim.mills@pmm.co.uk or 01254 604302).

Introducing Our New Business Sales Website

 

When you build a business from the ground up you devote a  huge amount of effort making it a thriving and profitable enterprise. Your business may well represent a lifetime of blood, sweat and tears so when the time comes to sell it you need to make sure that you have a first class team on your side.

Our new website concentrates on giving owners a better understanding of what is involved and how to position their business in anticipation of a sale.

Jim Akrill, corporate finance partner at PM+M, said: “Our approach is simple and we use our years of experience to guide, support and advise the seller through every stage of the process. We provide a complete service to business owners as opposed to acting merely as a broker. We believe it is vital that all aspects of a deal are considered including effective tax planning, ways to enhance value as well as providing efficient project management to ensure rapid progress to completion. With us, owners can get all this and more under one roof.”

If you would like to explore the prospect of selling your business, even if you’re not quite ready to take the plunge, we’re running a series of seminars to help business owners understand the sale process and how to increase business value. Please visit www.pmmbusiness-sales.co.uk to book or to obtain more information.

Alternatively, if you would like to discuss the sale of your business please get in touch with Jim Akrill at jim.akrill@pmm.co.uk or call 01254 679131.

The Rise And Rise Of Asset Based Lending

Once seen as a last resort for businesses in trouble, asset based lending (ABL) is a source of finance that has grown year on year for the past 10 years. Why is this?

For a start, bank loans have been harder to obtain since the financial crisis as lending criteria have become more stringent. Because ABL concentrates on lending secured against more easily realisable assets such as debtors, plant and some types of stock, funders can be more flexible in terms of the structure of the finance being made available.

Moreover, the increasing popularity of ABL has led to an increase in the number of providers leading to greater competition and keener pricing.

ABL is not right for every business, but where it is right a little time spent talking to a number of potential providers could reap significant cost savings and produce a range of alternative options.

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Jim Akrill – Corporate Finance Partner

 

 

 

 

 

Corporate Finance Update

shutterstock_242204359The PM+M Corporate Finance team continues to grow its presence in the North West market and also on a wider geographic basis. Over recent months we have been involved in a variety of disposal and acquisition transactions.

On the sell side we have disposal mandates in construction, manufacturing, wholesale and software. There are an increasing number of buyers in the marketplace and valuations are on the rise for good quality businesses.

On the buy side we are acting for a number of businesses in the manufacturing and engineering sectors. We have completed a Management Buy-In and a trade acquisition and have a number of advisory clients located in the North West, the Midlands and beyond.

We are also seeing an increase in business owners seeking strategic advice as they start planning for growth or future exits. The value of good advice and support in this field cannot be underestimated.

If you are thinking of buying or selling your business, or would just like to talk about your future plans, please contact Jim Akrill or Tim Mills for a free consultation.