Monthly Archives: September 2016

A Day of Hit and Miss


Thursday 22 September saw the return of the Napthens Clay Shoot, raising money for Blackburn Youth Zone. The event was held at the impressive Coniston Hotel Country Estate and Spa where the fantastic weather highlighted the stunning North Yorkshire countryside.

Teams of four were welcomed at the Estate’s Shooting Lodge for coffee and bacon rolls on arrival, before being matched with a professional instructor and sent on their way to shoot 35 clay pigeons from a series of shooting posts. These were varied to provide a range of difficulty and to replicate the behaviour of pheasant, grouse or rabbit. Whilst it is fair to say that the real thing need not have been too concerned about their safety in our presence, this wasn’t the case for some of the four-man teams. PM+M was represented by Tim Mills and your truly, with my guests for the day being Jon Palich of Handelsbanken Burnley, Graham Campbell of Moose Media and Mike Duviau of Go-Velo.

Thanks to the expert tutelage of instructor Allan we were quickly showing signs of improvement. Two of our party had shot before but two (me included) were entirely new to the experience. Of the 35 clays that were presented to each shooter we managed 16,16, 14 and 9 ‘hits’. I’d like to think that there was an eco-conscious decision being made to allow the re-use of some clays or for their breeding population to be preserved.

Upon completion of the shoot, our band of four re-joined our fellow guests at the Hotel for a fine lunch and to share stories of the clay(s) that got away. I offer the option of singular or plural for the reason that Stephen Ford of RBS managed to shoot 34 of his possible 35 to take the Sharp-Shooter award. The other award available on the day was for Best in Show (Best Dressed) and I have to confess that the suggestion in advance of the day of Jamie Allison of Napthens being convinced he had this in the bag I had to explore the dark recesses of my wardrobe to offer him some competition. The fact that he was from the organising company and that I had strategically added a Blackburn Youth Zone coloured orange tie to my outfit meant that I snatched the prize from his eager hands.

The raffle and auction that followed helped to raise over £7,000 for BYZ with some especially generous prizes on offer and some equally generous bids from the room. Co-sponsors  Bowker BMW, Together Money and Wardfield Sporting Goods please take a bow.

A great day was had by all, with guests entertained and professional connections built or maintained. I look forward to defending one title and aiming (pun intended) for a second next year. I think there could be some practice planned, after all PM+M honour is at stake!

Neil Welsh – PM+M Wealth Management

PM+M Annual Quiz Raises £660 for Pendleside Hospice


L-R: David Buskey, Gary Jones and Jake Neary (all Woodcocks) and PM+M’s Jane Parry.

Once again, the PM+M annual quiz got the region’s best business brains ticking which took place on Thursday 22nd September at Ewood Park and it is the third time the quiz has been held.

Around 70 people attended with 22 teams competing from across the various sectors including banking, insolvency, property and legal. The categories were: Europe, Royalty, Blackburn, Burnley and Bury, the Olympics, food & drink as well as the ‘killer round’.

The night raised £660 for Pendleside Hospice.

The winning team for the third year running was Woodcocks Haworth & Nuttall who scored 71.5 points. The runners-up were Handelsbanken Blackburn, who notched up 70 points, followed by Clough and Willis who came in with 66.5 points.

Jane Parry – managing partner at PM+M – said: “This is the third year of staging the quiz and it just keeps getting more enjoyable. It’s fantastic to see so many of the region’s leading professionals in one room battling it out and raising cash for such a worthy cause.”


SRA re-issues its warning about investment schemes


The Solicitors Regulation Authority (“SRA”) has reissued its warning about high-yield investment schemes. The warning notice can be found here.

The intention of this notice is to remind law firms about the potential risks associated with being involved with such schemes. These schemes have been around for many years and are becoming more and more sophisticated. The SRA plans to issue more guidance soon for the purpose of highlighting the risks to the public.

The background to all of this is that risks are high where law firms are approached to be involved in order to add credibility to an investment scheme. This can, for some potential investors, add a degree of security that the investment is safe and valid, when clearly it should do no such thing.  Where law firms are being asked to act as a bank, doing so would be a breach of the SRA Accounts Rules.  Rule 14.5 of the current Rules states that a law firm MUST NOT provide banking facilities through a client account.  Therefore, any client bank account transactions must relate to an underlying transaction or to a service being provided in line with the law firm’s normal regulated activities.

If you are approached, whether as a law firm or an individual, and the returns seem amazing or the deal just sounds odd, it’s probably too good to be true.  Stick to your gut feel and do not get involved.

Stick to providing legal services as you know best and comply with the your Handbook and Rules. Further opinions on the proposed changes have been published on The Law Society Gazette and can be found here.

INTERVIEW – Tim Mills, Corporate Finance Partner, Answers Your Questions On MBOs


1. How is the transformation from senior manager to a seat on board best achieved in operational and preparation terms?

If a position on the board is on the table then it is essential that the individual does not feel overwhelmed by the opportunity. They should be invited to observe board meetings and given an overview of the current directors, before being made a director.

Any gap left within the management team by a person moving to the board should be anticipated and the necessary plans put in place ensure the promotion does not have a negative impact on day to day operations.

2. Raising the subject of a MBO can be difficult. Where does the conversation start? How is it best approached?

To enable the topic of a MBO to be raised by management there needs to be a willingness between all members of the MBO team and the business owners. If management are instigating an MBO then they should confirm with the owners their interest and agree who will form the MBO team.

Discussions can begin on an informal basis but should become more formal as matters progress and external advisers are engaged. It is also important to agree who will be responsible for settling the potential fees involved in a MBO. This is particularly important if the deal fails to reach completion.

Business owners that are well advised should have an outline of an exit plan. This may well include the option of a MBO which may lead them to commence discussions with management. In this situation the early decision for management is whether they actually want to become business owners.

3. How do you go about valuing a business for an MBO? What are the main issues?

The approach to valuing a business for a MBO is the same as when valuing a business for a trade sale. It will usually be on a maintainable earnings basis with a relevant multiple applied. However, the value that vendors may agree for a deal with a MBO team will often below what they would require from a trade sale. This is due to a number of factors that only apply to a MBO. These include the vendors passing the business to a team that have helped develop it; the vendors would expect to be agreeing to substantially reduced warranties and indemnities within the legal documentation and a MBO could provide more security for retaining employees than a trade sale.

These factors carry a value for the vendors which they must try to quantify as the overall consideration they will receive from a MBO will invariably be below a sale to an external party.

The key issue for a MBO team is to agree a value that is acceptable by the vendors but does not require the MBO team to agree to terms they feel are unfair.

4. Sourcing funds isn’t so much of a problem in 2016, but choosing an effective funding structure can be challenging. What are the options for structuring a buyout?

The funding structure will be dependent upon a number of variables. These include how much the MBO team have available, how much the bank or other funders are willing to lend to the MBO team, what security is available and how much the vendors are willing to leave in the business as deferred consideration. The choice of funding will also be based upon the size of transaction which may require private equity funding in addition to debt.

The key to structuring the deal is to ensure the funding required fits within the current business, together with the future plans the MBO team may have. The more a deal can be de-risked from an external funding perspective the more attractive it becomes to them. Therefore, including a reasonable level of deferred consideration into a structure is advisable, particularly where the vendors may remain with the business for a period of time after completion.

Structuring a deal that fulfils the requirements of the vendors, the MBO team and potential funders is rarely straight forward and advice should be obtained at an early stage by the MBO team.

5. What are some of the pitfalls along the way to completing a buyout?

Completing a MBO is often quite stressful and can change the personal relationships that the MBO team had with the vendors. This is often the case when the vendors remain in the business for a period after completion and effectively become employees with former management now becoming their bosses.

The transaction can be time consuming and can lead to those involved losing focus on the current business operations. This in turn can impact on trading performance and give rise to concerns for funders even before the MBO takes place.

Ensuring all of the MBO team agree on decisions as matters progress can cause issues and may result in some of team deciding to no longer be part of the MBO before completion.

If any of the above topics resonate, please feel free to contact a member of the PM+M Corporate Finance team on 01254 679131. Whether you are considering a MBO or thinking about selling your business, the team will be more than happy to sit down with you for an initial fact-finding discussion and explain how they can help you make the process as simple and stress-free as possible.


HMRC Asset Seizures Up 145% In A Year


The percentage of businesses in the UK having their assets seized is significantly increasing in this tax year. In order to settle outstanding debts, HMRC have been clamping down on businesses who fail to pay their tax bills.

Funding Options announced that HMRC seized assets to recover £42.6m of outstanding debt in the last year, an increase of 145% from the previous year where debts to the Revenue totalled £15.3m.

Under a power called ‘taking control of goods’ HMRC can seize assets in order to settle debts from businesses that have been unable to pay their overdue tax bills. The assets seized are then sold at auction in order to recover the money owed to HMRC.

It’s more important than ever to ensure your tax affairs are in order. If you need any help or advice in organising your tax affairs, please get in touch with our tax team by emailing or by calling 01254 679131.

Consultation On Limiting Benefits Within Salary Sacrifice Arrangements

shutterstock_313380641With the huge uptake of salary sacrifice arrangements meaning an unexpectedly higher loss of revenue, the government is now considering restricting the benefits that can be included in salary sacrifice arrangements.

The consultation, which remains open until 19th October 2016, is considering how the tax and national insurance benefits currently enjoyed by both employees and employers will potentially be removed. The proposal is to restrict the tax savings on the benefits which are considered to be more of a perk and less than a necessity.

They have however confirmed that any restrictions will not affect pension saving, childcare, workplace nurseries and health-related benefits such as cycle to work schemes.

Where the provision of a benefit is currently tax-free, a value equivalent to the salary sacrifice would be included on a P11d or taxed through the payroll. This would negate the potential tax saving for both and the employer would be liable for national insurance. Examples of benefits that would be affected include health screening, car parking, mobile phones and non-core life assurance.

An example of how the scheme currently works for tax-free benefits is detailed below.

Kate is an employee paying income tax at the marginal rate of 40%. She is considering taking out a new personal mobile phone contract worth £1,000 per annum. Her employer suggests that the company instead enters into the mobile contract in return for Kate giving up £1,000 of her gross salary. Kate agrees as the net cost to her is just £580, being the reduction in her take home pay after taking into account income tax and NICs (£1,000 less 40% income tax and 2% NICs at marginal rates). She has therefore saved £420, as the provision of the mobile phone by her employer is a tax-free benefit. Also, the company has saved employers’ national insurance of £138 (13.8% x £1,000) due to the salary reduction.

Benefits that are not tax-free but tax advantageous due to a reduced benefit in kind would attract a value equivalent to the salary sacrifice, not the benefit in kind and taxed through a P11d or payroll as above. Typical of this type of sacrifice would be car schemes.

No firm time line has been set for the Government to consider the recommendations following the consultation but it is thought they may be introduced as early as April 2017.

For more information on salary sacrifice arrangments, please get in touch with our tax team at or by calling 01254 679131.