Neil Welsh wins Business Enabler of the Year

We are pleased to announce that on Thursday 21 June 2018, Neil Welsh (Financial Adviser at PM+M Wealth Management) was awarded Business Enabler of the Year at the Downtown in Business Lancashire Business Awards 2018.

The 10th annual awards ceremony was held at Stanley House Hotel & Spa, and celebrated the achievements of the county’s leading business professionals in their respective roles and industries.

Winning the award for Business Enabler of the Year is an incredible achievement for Neil and recognises his commitment to business development at PM+M, alongside facilitating introductory conversations between his clients, contacts and extended network of professionals.

Regular activities co-ordinated by Neil in relation to business enablement are regular table hosting at various Business Network lunch events, and his monthly PM+M Two-Wheeled Professionals Cycle-Networking group.

Following receipt of his award, Neil commented: “I would like to say a huge thank you to all those who voted for me, alongside the many friends, colleagues, contacts and connections who have offered their kind words and congratulations.

“The timing of my win is helpful. My role within PM+M is evolving and whilst I still have client-facing and client-servicing function, I also now have an increased business development remit. What better way to validate this aspect of what I do than by being recognised for it at the start of the journey.”

Frank McKenna, CEO of Downtown in Business commented: “The Lancashire Business Awards are always a great night, and this year was no exception. We had an exceptional group of winners, which was fitting as the awards were being hosted for the tenth year, and I believe the 2018 nominations demonstrated the strength and resilience of the country’s business community.”

Informative and Entertaining – who would have thought you’d hear that when talking pensions?

On 6 June 2018, over 40 delegates gathered at Turf Moor, not to greet the imminent arrival of European Football at Burnley FC for the first time in 55 years, but for the arrival of Sir Steve Webb, former Minister for Pensions and now Director of Policy for Royal London, to listen to him deliver a highly anticipated ‘Tour of the Pensions Landscape’ as guest speaker at our wealth management seminar.

It is probably fair to say that pensions aren’t known for being exciting, but that view was quickly dismissed by the passionate and witty discussion of Steve. Having spent 18 years as an MP, Steve’s public-speaking abilities are second to none and his presentation at Turf Moor yesterday certainly didn’t disappoint. Steering away from the standard PowerPoint presentation, Steve took a freshly-upholstered chair from Burnley FC’s newly refurbished Chairman’s Lounge, literally turned it upside down and used the four legs as the four pillars of his discussion, giving insight into state pensions, workplace pensions, pension freedoms and the tax treatment of pensions, describing the latter as the broken leg of the chair.

Discussion and debate took place around the merits of making voluntary national insurance payments for those unlikely to receive a full state pension and increasing workplace pension contributions to ensure employees can afford to retire. When he got to explanations around pension freedoms and tax there were notes aplenty being taken, interspersed by fits of laughter as Steve ensured there was never a dull moment – it was a masterclass of content and delivery.

Should you wish to discuss your own pension and retirement issues, please don’t hesitate to get in touch with a member of our team. PM+M wealth management works collaboratively with our tax team and can navigate you from the beginning to the end of your pension journey, considering everything from investment choice to tax-relief, and Lifetime Allowance to Tapered Annual Allowance and estate planning. Our specialists can help you to plan, understand your options and ultimately help you achieve more from whatever route you take. For a confidential, no obligation discussion, please contact us 01254 679131 or via email at wealthmanagement@pmm.co.uk.

PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.

What’s in a number?

Our corporate finance Partner, Jim, takes a look at valuation differences across the market, and what these mean for owner-managed businesses.

I am often asked my opinion on what a business might be worth, so it always pays to be up to date with the latest deal data for me to justify the multiple I am using in a valuation. The latest private company price index tells me that the mean EV/EBITDA (Enterprise Value to Earnings before Tax, Interest, Depreciation and Amortisation) multiple paid by trade buyers during the first quarter of 2018 was 10.3 times, a multiple which hasn’t varied much for the last two years.

However, this is an average figure and we have no idea what the spread of the range is, whether there are any material distorting transactions included or what sectors the businesses sold were in. And in addition to this, the mean Enterprise Value of all the transactions analysed was £89 million, implying that the businesses included in these statistics were considerably larger than the majority of those I deal with in the owner-managed sector. Maybe 10.3 is not such a reliable comparator after all.

Luckily, there are other published data sources more focused on lower priced deals. This year, the SME valuation index (published annually each November) gave a median EV/EBITDA multiple of 4.2, which should take out the effect of a very high or low transaction. However, the spread is 3.9 to 8.5 and there is no sector split. So, is the right answer for your business 4.2, 5 or 6? There’s a big difference.

Of course, the only real answer is what a buyer is willing to pay, and they will often have quite a different view about what your business is worth. Having said that, if you are thinking about selling then the best thing to do is to consider your business’ current value and how you can increase it. It may not be an overnight fix, so make sure you start thinking now and speak to someone who knows what buyers want.

A final word of advice: a smooth sales patter might tell you that your business is highly desirable and worth a lot more than you thought. If something sounds too good to be true it often is, so get a second opinion before deciding what to do next.

We can provide you with an initial, accurate valuation, pinpoint where you want to be, and deliver a strategy that helps you get there. Get in touch today for a no cost, no obligation discussion on 01254 679131 or jim.akrill@pmm.co.uk.

Gender pay gap: a comparison

By 4 April 2018, all UK firms with over 250 employees were required to publish details of their gender pay gap.

Although we don’t fit this description and so were not legally required to submit a report, we decided to conduct our own analysis to help us understand our own pay gap patterns and identify ways in which we could make changes for the better.

We are pleased to report that PM+M has a mean gender pay gap of only 2.9 per cent, comparable to the top 20 accountancy practices in the UK which average a 16.8 per cent gap. When looking at the median gender pay gap, PM+M posted a -14.6 per cent gap, which compares to a 12.1 per cent national average and a Lancashire average of 7.6 per cent.

Our minimal pay gap is reflective of our strong belief in a diverse workplace, inclusive culture and flexibility for our people, and we are really proud to be so far ahead of our peers in this area.

With PM+M having a female managing partner and four of our thirteen partners being female, we truly understand the importance of gender diversity in the workplace and equal opportunities for all. Our focus on gender equality as a priority area confirms our commitment to closing the gender pay gap altogether to ensure that diversity and inclusion is maintained at PM+M in the years to come.

EMI share options lose tax relief

The very generous tax reliefs available to employees who are granted share options under the Enterprise Management Incentives scheme (EMI) are classed as an EU State Aid.

This expired on 6 April and, unexpectedly, has not been renewed. We expect that this will be resolved in due course, but anyone who is currently in the process of setting up new EMI share options should pause because, as it stands, there will be no tax reliefs available for those new options.

Existing options granted before 6 April 2018 are unaffected and will continue to benefit from the generous tax reliefs.

For further advice on this or any other tax matters, please do not hesitate to contact Jane Parry on 01254 679131 or via email at jane.parry@pmm.co.uk.

The ‘who’ and ‘how’ of succession

Helen Clayton, Partner, takes a look at one of the main questions of succession planning, who is going to allow you to retire and how is it going to happen?

To make succession effective, including minimal disruption on your firm, your teams and your clients, I cannot emphasise enough the importance of thinking ahead.  This isn’t reserved for those considering retirement; it’s also for those in the firm (or outside of the firm) who are considering, or champing at the bit, to be the future leaders.

Understanding who might be coming through the ranks and who might be attracted to joining, or indeed who you would like to join the business, is critical in ensuring it is they who are equipped with the appropriate skills to lead and manage in the future. Time investment is important to ensure you really know these people. What drives them? What are their ambitions? What do they need to be able to create a seamless succession plan?

Below are some of the areas that you will need to understand:

  • Age group and corresponding generic attributes
  • Ambitions and goals, including timeframes
  • Strengths and areas for development
  • Experience (and ability) in managing and leading
  • Do they take people with them?
  • Are they open to change and personal development?
  • Attitude to risk
  • Is your firm in the right place for these individuals to take it forward?

Mentoring and coaching will be a key element of developing people into future leaders. In an era of increasing competition, regulatory change and ongoing challenges and opportunities, future leaders will need to be business owners, role models, great with people, business developers, and not to mention great lawyers. It may be that one individual does not need to be first class in all of these areas; it may be that as a partner group these skills are spread across everyone and therefore as a team, it’s as powerful as it can be. In fact, it’s probably preferable that these skills are spread throughout a team, with overlap. After all, we’re not meant to be clones, are we? We’re individuals with our own strengths.

There is a key word in all of this however that I have not yet mentioned: experience. Without experience, how is anyone expected to become the future leader of a business? As my mum has always said: you only learn by your own mistakes. Any mistakes made cannot be catastrophic and with the right role models, mentoring and guidance in place, none should be. Therefore, what is there to lose?

If you’re in the position where you’re considering succession in your firm, make it about the people. If you don’t already really know them as individuals, make that time investment. It’s your business and your success that you’re handing over, so why not make it the best it can be to the best people?

For advice and guidance on succession planning, please do not hesitate to get in touch with a member of our team on 01254 679 131.

Spring Statement 2018

Jane Parry, Tax Partner, comments on today’s Spring Statement announcements…

As expected, the Spring Statement was a bit of a non event which was refreshing as I know many businesses didn’t want another ‘mini budget’. They’re tired of hearing new policy announcements along with additional tax and spending measures; they simply want to focus their time and effort on growing despite the ever present uncertainty of Brexit and things like the Making Tax Digital regime and the looming shadow of GDPR.

The news around consultations on tackling the issue of single-use plastics and the taxation of the profits of digital giants like Facebook and Google is all well and good, but action is what’s needed not more consultations.

On a positive note, it was good to learn that tax receipts are covering day-to-day government spending for the first time since the 2008 financial crisis, that borrowing is £4.7bn lower than expected and that growth is slightly higher than forecast last year. However, we’ve still got one of the slowest growth rates in the G7 and public debt as a percentage of national income remains well above 80%.

The consultations on productivity improvement and tackling late payment are both good news for local businesses, as is the additional funding to help smaller businesses take on apprentices.

What I want to see from the Government over the next few months is simple: more clarity around Brexit and how it plans to help businesses grow by closing the skills gap and helping them to improve productivity. These are the real issues that need to be addressed, everything else comes second.

If you would like to discuss any of today’s announcements with the PM+M team, please call 01254 679131.

What could you achieve with cloud accounting?

Advancements in technology are constantly changing the world as we know it. One particular software development within the accountancy sector has altered the market completely, succes­sfully streamlining processes for business owners in new ways, allowing them to gain better control of cash flow and increase profitability.

We are of course, talking about cloud accounting, a type of software which enables you to access your finances in the ‘cloud’, from anywhere, at any time. In recent years, cloud accounting has proven to be an increasingly compelling choice for thousands of people looking to manage their finances, but with so many different options available, you might find yourself asking “where do I even start?”

Here at PM+M, we believe that the best way to prepare is to find an adviser who understands your business, your current financial operations and your objectives. From here, your adviser can guide you towards a cloud package based on what you want to achieve, and what will work best for you.

It is also wise to consider the benefits of adopting a cloud accounting package in comparison to your current processes.

Alongside helping you to make better decisions, save time and boost profits, cloud accounting software can also act as a flexible, low maintenance, cost effective alternative to traditional accounting software, putting you in control of your cash management and allowing you to gain real-time insights into your finances.

We understand that the move to the cloud might be daunting at first, so here at PM+M, we stay by your side at all times. Our team of dedicated advisers are always on hand to guide you through the process, and answer any questions you may have about your cloud package.

Whilst we are more than happy to manage the software on your behalf, we can teach you to use the software yourself so that you can better understand what we do, and take control of your software, should you wish to do so.

Our team have a wide range of experience in the operation of various cloud accounting platforms, allowing us to recommend a software package that will work best for you. Our chosen software providers are Xero and QuickBooks, both leaders in the field, and widely regarded to be some of the most technologically advanced cloud accounting software providers in existence.

Whether you are managing a start-up business, a growing SME or a large scale enterprise, we can guide you towards a cloud solution that will give you a clear insight into your cash, drive your profits and change your business for the better.

If you believe that cloud accounting might be for you, or want to learn more about our available software packages, get in touch with Jill Morris today on 01254 679 131, or via email at jill.morris@pmm.co.uk.

Could an MBO be the best exit for you?

Congratulations to all you SME owners out there!

According to Government Statistics, 99% of all private sector businesses at the start of 2017 were SMEs, accounting for 60% of private sector employment and 51% of private sector turnover. SMEs account for 99.5% of businesses in every main industry sector.

But let’s not fall into the trap of thinking that these are all tiny businesses. The definition of a medium sized enterprise is a headcount of up to 250, a turnover of up to 50 million euros and a balance sheet value of up to 43 million euros. In my book, a business at the top end of that range doesn’t feel quite so small.

As regional corporate finance advisers, we are often asked to advise businesses at the lower end of the range, let’s say those with a turnover in the region of £5 million. You know the type – great businesses that make healthy profits and have provided their owners with a comfortable lifestyle. On paper, they look to have a high potential value and quite often, the owner believes that a large trade buyer will sail over the horizon and snap them up. But how often does that really happen?

Whilst each year, we see many success stories involving trade buyers and SMEs, it doesn’t work for everyone. Trade buyers can often say “it’s just too small for us”, “it’s not as scalable as we’d like”, “there is too much reliance on a single product or customer”, or “we are looking for second-tier management”, after looking further into an opportunity. In these circumstances, an MBO deal is often a great alternative for the shareholder.

MBOs are currently very attractive, due to large amounts of available funding at historically low rates of interest. Typically, a successful MBO needs three things: a profitable and cash generative business, a competent and complete management team and a flexible seller confident enough in the new management team to be part of the funding solution.

Let’s take it as read that you have a good business. Your critical task is to develop or find a management team with the ability and experience to run the business such that you feel able to take the risk of part funding the deal.

If you are a business owner or a management team and you think that the MBO route might be the answer for you, don’t put off thinking about it because these things take time. Talk to us, and let us give you the benefit of our experience.

When Will Auto Enrolment Contributions Increase?

The minimum contributions rates for automatic enrolment are set to increase from 6 April 2018 and again from 6 April 2019. Employers will be required to increase the amount of their contributions into their employees’ automatic enrolment pension scheme. Employees’ own contributions will also increase.

 

The table below explains:

Date effective

Employer minimum contribution Employee minimum contribution

Total minimum contribution

Currently until 5 April 2018

1%

1%

2%

6 April 2018 to 5 April 2019

2%

3% 5%
6 April 2019 onwards 3% 5%

8%*

*subject to scheme set-up

Pensions Act 2008, every employer in the UK with at least one employee must put certain staff into a pension scheme and contribute towards it.

All employers that were in business prior to 30 September 2017 had a staged approach to auto-enrolment. However, since 1 October 2017, all new businesses have had to introduce a pension scheme immediately within the minimum 2% contribution level (usually split 1% employer and 1% employee).

What should you do to prepare?

Employers must act to ensure they are prepared to implement the increases correctly to all affected employees.

Employers should review contracts and pension announcements to see if the increased contributions apply automatically to their workers and employees.  If not, then employers may need to consider changes to contracts to increase member contributions which can also trigger a minimum 60-day consultation before the change can be made.

Future rises

The contribution levels will continue to rise until the employer is paying a minimum of 3% towards the pension and the total contribution reaches at least 8% – with the employee making up the rest.

Contact us

If you need advice on understanding these increases, implementing changes or help with any of your auto enrolment needs please contact our wealth management or payroll team on 01254 679131.

PM+M Wealth Management Ltd is authorised and regulated by the Financial Conduct Authority.