Tag Archives: SMEs

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.

Invoice Financing For SMEs

Invioce FinanceMany SMEs have been held back by Britain’s late payment culture for far too long and, as a result, the Government’s plans to relax invoice financing rules early next year are highly anticipated.

From early 2016, The Department for Business, Innovation and Skills (BIS) is banning contractual “non-assignment” clauses used by bigger businesses which effectively prevent SME suppliers from accessing funds through invoice finance.

Currently 44,000 businesses have access to invoice financing. This means that they are able to fund working capital and gain access to the cash they need straightaway instead of waiting to receive payment for an invoice, which can often be beyond agreed credit terms.

Unpaid invoices are often the biggest asset an SME has and invoice financing is an important means of funding working capital. Any restriction on access to funding, intentional or not, hampers growth and when combined with a late payment culture still prevalent in many large businesses, the effects can be devastating for an SME.

Although invoice financing isn’t right for every business, SMEs have found it incredibly difficult to establish reasonable terms with larger companies. The Government plans to introduce a new Late Payments Commissioner to deal with supply chain bullying as well as a conciliation service designed to assist small businesses in settling late payment issues and disputes.

Larger businesses should start to ensure that they’re compliant with the new rules and take this opportunity to be more transparent and open about their payment terms. SMEs will soon have new options to help them grow and plan ahead with greater confidence by knowing they will have the cash in place to move their businesses forward.

For more information on how your business can raise alternative finance, please contact Jim Akrill at jim.akrill@pmm.co.uk or call 01254 679131.

Auto Enrolment – Should I Be Preparing Now?

Auto Enrolment blogIn March 2015, a total of 5.2 million eligible job holders were automatically enrolled and around 35,000 employers had completed their declaration of compliance, according to The Pensions Regulator. This year, around 45,000 employers will reach their staging date, but that’s only the tip of the iceberg. Next year 45,000 businesses per month will be required to comply.

Most small owner-managed businesses with fewer than 30 employees will have little or no time to deal with the amount of administrative work that comes with auto enrolment, not to mention the payroll expertise.

It seems that many of the traditional pension providers, often large, well-known insurance companies, are being choosy about the smaller businesses and their schemes, deeming them not as profitable due to the smaller number of employees and contributions being paid.

So what can small businesses do now?

  • Start the process 9 to 12 months ahead of your staging date. Identify a suitable provider and discuss what you want from your scheme.
  • At least 6 months before your staging date start setting up your pension scheme with your chosen adviser. Don’t think that because you employ fewer than 30 people it will be quick and easy.
  • Don’t assume that you can use your existing pension scheme, if you have one. It may not meet the new requirements.

For more information or for a no obligation discussion, please email Antony Keen at antony.keen@pmm.co.uk or call 01254 679131.