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Founders don’t always win big on ‘successful’ exits

April 3rd, 2017 by Robert Taylor
You start a business. It grows. Exponentially. Bigger and bigger. More customers, more sales. Suddenly people are knocking on your door. Venture capital houses, who want to invest money in your business and help you grow. They come in and establish themselves. More good times ahead. All of a sudden you’re a well-known name. You start to attract interest from buyers, perhaps a bigger rival. You sell. Payday. You win big, right? Live happily ever after.

Well, maybe not.

Venture capitalists are known for making apparently risky moves – investing in young start-ups still getting a feel for things, perhaps in the fluid tech or digital sectors. But these apparently risky moves are usually well-thought-out strategic investment decisions designed to ensure that if a company they’ve put money into does get snapped up, they will do very well out of it indeed. Potentially at the expense of the founder(s).
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The most common hold-ups in a business acquisition

February 12th, 2017 by Chris St Cartmail

The most common hold-ups in a business acquisition are revealed in an exclusive video interview with Rob Goddard of Evolution Complete Business Sales.

The transcript of the interview follows:

It usually revolves around one topic which is that the buyer and seller or one or the other get lost in the detail.

They lose sight of the main objective which is to try and put two businesses together.

Or if it’s an investment play, that an incoming investor adds value to the business.

Often they can get lost in items of detail – what happens to the deal process is that it slows it down.

It also makes it more expensive because not only with management on both sides trying to iron out a deal, but if you’ve got lawyers acting – and accountants and other advisers – the bills quite often, particularly with lawyers, can extend. Especially if you’re playing your lawyer by the hour.

One’s got to be careful of dragging out the deal negotiation process unduly. It will get expensive and something comes into play – which will be the subject of my second book – which is deal fatigue.

Rob Goddard
With buyers and sellers there comes a point when it goes on for far too long and one or both parties just get tired of it all.

They keep going round the houses and nothing seems to be able to be crystallized. You can be 18 months down the line and there’s nothing concrete, nothing materialized and no agreement to go forward.

What does this mean for the deal?

Stalemate! One or the other will fade away, disengage from the process and you may have lost a year, 18 months, two years. Three years is the longest period of time I’ve heard about which is incredible. It should be done over a three, four month period to negotiate, to construct a deal.

And then get the lawyers involved and make sure the lawyer is on an hourly rate. Sorry lawyers, fixed price!

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Survey of pub sales reveals large increase in freehouse deals

January 5th, 2017 by Chris St Cartmail
Green Man Pub
The volume of operational freehouse pub sales has shot up by 150 per cent in the last year, whilst bottom-end pub sales are down by 28 per cent.

This is according to the annual ‘Survey of Pub Sales’ carried out by leisure property specialists Fleurets. The survey revealed the stability of the pub sales market in general, which is surprising considering the political, regulatory and economic turbulence over the past twelve months.

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Alternative finance available via ‘Asset Based Lending’ leaps to £4.3 billion

December 12th, 2016 by Chris St Cartmail

asset based finance in the UK
Amount of available lending against machinery and property in the UK

The amount of alternative finance available under ‘asset based lending’ to UK businesses reached a record high of £4.3 billion, up 22% in the last year.
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Company liquidation rate in England & Wales lowest since records began in 1984

November 27th, 2016 by Chris St Cartmail

Insolvency Office statistics reveal that the company liquidation rate in England and Wales is at its lowest level since records began in 1984. There has been a continuous downward trend in the rate since 2011.

In the 12 months to the end of September 2016, 0.41 per cent of active companies (about one in 244) went into liquidation. At the same point last year 0.46 per cent of companies (one in 215) had collapsed into liquidation in the previous 12 months.

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Manny Stul – EY Entrepreneur of the Year 2016

October 11th, 2016 by Chris St Cartmail

EY’s Entrepreneur of the Year Awards is an annual celebration of the energy and strength of businesspeople the world over. The awards aren’t just about individuals; they shine a light on the passion and spirit that continues to reinvigorate the business world and beyond.

Manny Stul

Manny Stul – EY photo

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A guide to buying assets from insolvent companies

September 29th, 2016 by Chris St Cartmail
Unfortunately, there will always be companies that fail to succeed and are closed down. The assets left behind, like equipment, machinery and property, are left for the licensed insolvency practitioner (IP) or liquidator to sell on to try and make some money back for creditors who are owed money. The profits made from asset sales are then distributed equally to creditors and the case is closed.
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What now for British M&A?

June 24th, 2016 by Chris St Cartmail

The Great British public has spoken and voted for the country to exit the EU. Cameron has resigned and the government is trying to put together an economic and legal plan for the road ahead.

Business owners will need to stay calm and concentrate on trading as usual. The uncertainty of markets and currencies may create difficult trading conditions for larger businesses who have suffered share price falls.

Economically it will be important for Britain to maintain inward investment and much of this, at least in the short to medium term, depends on the deal that the UK now negotiates with the EU. Hopefully the country will successfully negotiate continued access to the 500 million people across the EU and European Free Trade Association. How it is going to do that without allowing for the movement of Europeans across its border is going to be interesting. Despite no other country having managed to this so far, Britain’s trade involvement with the continent is substantial and mutually beneficial, so we should see a deal being struck with favourable terms after some serious negotiation.

In the event of Britain not succeeding in its continued membership of EFTA, all is not lost. Currently around two thirds of UK exports are destined for non-EU countries and it is entirely possible that over time the new freedom to negotiate free trade treaties will increase substantially to mitigate any EU shortfall. Of course there are already treaties in place between some of these countries and the EU which will need to be renegotiated by Britain.

Legally, the retreat from Europe shouldn't’t affect private M&A deals where the required documentation is reliant on English law and the exclusive jurisdiction of the English courts. However current and recent M&A contracts ought to be re-examined from a legal perspective in the light of Brexit. That’s because Britain’s withdrawal could be deemed a ‘material adverse change’ and therefore potentially enable a contractual clause to be invoked.

M&A deal flow slowed slightly in the lead-up to the referendum, though only from round mid-May. It ought to be noted that foreign (non-EU) investment into the UK has increased substantially this year over last year. This will pick up again now the referendum is over. The lower pound will certainly make UK company assets more attractive.

British business is generally agile and used to a fast-moving, competitive trading environment and an uncertain political and economic landscape. The legal and regulatory environment is robust and corporate tax rates are low. British creativity and ingenuity continues unabated.

What would Brexit mean for the business for sale marketplace?

June 21st, 2016 by Chris St Cartmail
The European Union: are we in or out? brexit

Britain will make its choice on the 23rd of June. The vote has already become personal, the heated debate is inescapable and the media scaremongering has seen each side giving as good as they’re getting with hyperbole and accusations.

But when it comes to the future of the British economy, is it possible to put emotion aside and make a clear decision as to what’s best for business? And for those in the M&A industry, is it really possible to make a clear case in favour of either side at this point?

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What are you waiting for? It’s a great time to grow by buying another business.

May 30th, 2016 by Chris St Cartmail

We are seeing more private businesses appear on the market again after a short lull. One of the reasons for this is that in the lead-up to the recent Budget there were rumours about that the government may have been about to kick the very useful Entrepreneurs’ Relief into touch. Heaven forbid!

This prompted more than a few concerned business owners to cash their chips before D-Day.

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