Archive for the ‘Business News’ Category

Is Britain in the midst of a takeover boom?

Wednesday, May 2nd, 2018

The end of April represented a crescendo in what has already been a year packed with deals involving UK companies. Excluding the value of the mega-merger proposed between Sainsbury’s and Asda which was unveiled just at the end of the month, there have been more than £200 billion worth of deals struck involving British firms.

According to Thomson Reuters data compiled just before the supermarket chains announced their deal, there have been 35 such transactions carried out since the start of 2018 totalling around £204 billion. If withdrawn bids are also considered, an extra £8 billion of mergers, acquisitions and other transactional deals have been proposed for UK companies.

This is far lower than activity seen in previous years: in 2015, the first four months of the year saw £74 billion; in 2000 – just before the internet bubble burst – £104 billion was reached.

Not only do these deals see UK companies consolidating their position in the market or merging with rivals, but represent the country’s largest firms becoming the target of overseas organisations. Shire’s £46 billion offer from Takeda, a Japanese rival, is one of these, the fifth offer made for the biomedical firm. Then there’s US giant 21st Century Fox’s bid for fellow broadcaster sky.

Some represent larger groups splitting off into more profitable units, such as Whitbread’s announcement that it would spin off Costa Coffee after pressure from shareholders who saw demerging the coffee chain as a profitable move.

According to David Lomer, co-head of mergers and acquisitions for EMEA at JP Morgan, this stream of activity – “one of the busiest starts to a year ever”, as he puts it – is set to continue, both in terms of the size of transactions as well as their number.

This is largely because “boardroom confidence is high”, Lomer explains, and because an appetite to make deals in order to seek better corporate value is growing around the world.

British companies also represent something of an attractive proposition to a buy who has enough cash to find their next growth opportunity. “British companies’ answer to Brexit is to get stronger domestically and also to grow internationally,” he explains. “Overseas companies are seeing past the noise and uncertainty surrounding Brexit and have refound their belief in the value of UK assets.”

Not everyone agrees with Lomer’s assessment of the market conditions, it’s true: Warren Buffett, a veteran Wall Street player, recently said that a “sensible purchase price” was hard to come by – speaking about the opportunities open to him in the US.

Looking at British firms, however, Lomer says the opportunities for savvy buyers are becoming bigger and broader, particularly those seeking consolidation in a competitive market.

Spikes in the retail sector, in particular, are showing that although some companies are finding trading conditions a little more difficult, there is an opportunity for companies with a unique business proposition to find their niche and grow into it. The losses incurred in recent weeks by brands like Prezzo or Pizza Express may make for worrying reading on first impressions, but also belie a market that is underserved or undervalued. For the right buyer, it could represent a fantastic opportunity.

So, just as city bankers have welcomed this recent flurry of activity, Britain’s business owners may soon be realising that growth is well within their reach.

Consumer trends that could inform your business purchase

Wednesday, April 18th, 2018

There are a number of interesting consumer trends emerging of which entrepreneurs and business buyers should take note. Opportunities abound for the right business people to respond to these trends with innovative products and services.

Tech-assisted living

It’s hard to ignore the increasing presence of voice activated systems in our homes, with children’s first words all over the country being “Alexa.” Ok, so maybe we’re not QUITE there yet, but we are all becoming used to these tools around the home. Incorporating AI into our everyday lives is becoming the norm and those with an eye on consumer trends will already be investing in this area.

Gardening – indoors

Gardening is quickly becoming one of the favourite pastimes of the young. Instagram is filled with pictures of flowers and plants and the renting generation are finding solace in their tiny yards and window boxes. The emergence of technology developed to help people cultivate plants indoors has also helped to transform the market for those without outdoor space or those living in very urban environments.

Socialising without booze

I know, it seems crazy, but it’s happening! People are increasingly socialising without the aid of alcohol and the leisure industry is responding, alongside the food and drinks industry. If you are looking at starting or buying a leisure or food/drinks business, ignore this trend at your peril.

Buying second-hand

Spurred by concerns about the impact of consumerism on the environment, the public are increasingly interested in buying all sorts of items second-hand. Online buying and selling sites are booming, alongside the second-hand car market, which has never before enjoyed such a golden age. Those looking to buy businesses should bear it in mind that consumers are no longer willing to blindly accumulate goods without thought as to how this might impact the environment around them.

Government proposes changes to Entrepreneurs Relief

Tuesday, March 20th, 2018

entrepreneurs relief UKThe government is close to making changes to Entrepreneurs Relief that could save you a considerable amount when selling part of your business.

As it stands, if an entrepreneur’s shareholding falls below 5 percent after they issue new shares in their business, they are unable to avail themselves of Entrepreneurs Relief. This has long been a bugbear of hundreds of successful people who have felt they are being penalised for their business’s success. (more…)

2017: A Record Number of Global Business Acquisitions

Tuesday, January 9th, 2018

Fact: 2017 was the biggest ever in terms of numbers of mergers and acquisitions across the globe.

Data from Thomson Reuters put the total value of international transactions at $3.5 trillion, with over 50,000 deals done.

How the Autumn Budget will benefit small companies

Friday, November 24th, 2017

Earlier this week the Chancellor, Phillip Hammond, unveiled the much-anticipated Autumn Budget, a document that sets out how the Conservative government will direct its spending and taxation policies going into 2018.


Betting companies limber up for autumn of dealmaking

Monday, October 9th, 2017

Some of the most globally renowned betting groups are preparing for a round of multi-billion pound dealmaking in an effort to establish industry dominance.

Revealed: “Hot Sectors” in the acquisitions market right now

Wednesday, July 26th, 2017

The ‘hot’ acquisition sectors are revealed in an exclusive video interview with Rob Goddard of Evolution Complete Business Sales.

The transcript of the interview follows:

What are the ‘hot sectors’ in the acquisitions market right now? (more…)

Most costly buyer mistakes revealed

Tuesday, May 9th, 2017

The most costly buyer mistakes are revealed in an exclusive video interview with Rob Goddard of Evolution Complete Business Sales.

The transcript of the interview follows:

What are the most costly mistakes that a business buyer can make?

I think to buy a business that doesn’t work out.

If you look on the internet you’ll find that the failure rate of an acquisition is between 50% and 80% in this country, depending on what sector you look at, within 5 years of the acquisition taking place.

It’s a high-risk strategy – where it works, it works extremely well.

And there are all sorts of reasons why that failure rate is so high in this country.

One of the things is buyers don’t take advice from professionals that are in the sector.

Another reason is they don’t do their due diligence properly. Because most people who are selling probably won’t tell you everything about their business. It’s like selling a second-hand car. They will tell you all the nice bits, all the bits that work well. What they often won’t do is tell you the things they are not happy with, the things that don’t work well. It is the buyer-beware aspect. And there’s a high failure rate.

Another costly mistake is buying a business for ego. It’s a no-no in terms of acquisitions.

Just because you have the cash to buy something doesn’t mean you need to buy it. It’s got to fit with your strategy for your overall business. Buying the wrong business, at the wrong time and for the wrong reasons is probably the most costly mistake a buyer can make.

Just because you can doesn’t mean to say you ought to.

What can be done to prevent these mistakes from happening?

When you’ve got several million pounds to spend or more, if you’re in that lucky position of having surplus cash, just because you’ve got the cash to spend, spend it wisely and make sure it’s in keeping with what you want to achieve with your main business – otherwise it could be a very costly distraction.

We try and find out: why do they want to buy? Why do they not just set up in competition with existing players in the industry? We want to tease out their motivations for acquisition. Increasing turnover shouldn’t be one of them – it’s the old adage of turnover is vanity, profit is sanity. If you make the wrong acquisition your bottom line could go through the floor. Don’t buy the wrong thing for the wrong reason.

Subscribe to the Business Sale Report for access to more exclusive videos and inside track access to the latest deals and business sale opportunities.

View the first in our video mini series – The most common hold ups in a business acquisition here.

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

Monday, April 3rd, 2017
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).

The most common hold-ups in a business acquisition

Sunday, February 12th, 2017

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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