Archive for the ‘Business News’ Category
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.
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?
For those of you using the Google Chrome browser on a PC or Mac, we’ve created a very simple way to let you know about UK businesses for sale and divestment news before anyone else.
Our new Google Chrome Extension installs in seconds into your Toolbar, to let you know at a glance whether there are any new businesses for sale in the industry sector(s) you are interested in.
The manufacturing sector in the UK has been somewhat subdued of late but there is still activity to be found and certain areas around the country are looking particularly strong.
Released today (3 August 2015), the latest Markit/CIPS UK Manufacturing PMI recorded 51.9. While this is still close to the growth cut-off figure of 50, it is an improvement on June's index, which recorded just 51.4 – a 26-month low.
The industry welcomed the increase, but it still remains below the average for the current sequence of growth, which began back in 2013.
Rob Dobson, senior economist with Markit, commented: “Although an uptick in the headline PMI breaks the decelerating trend in UK manufacturing, growth remains near-stagnant and suggests that the sector is continuing to act as a drag on the economy.”
The PMI comes after the last week's (30 July) publication of the EEF Regional Manufacturing Outlook which found that Wales and the East Midlands were both showing particularly high levels of activity with GVA in these regions both registering above 15 per cent.
For Wales, transport, metals and machinery were the top three sectors influencing this strong performance. Transport also performed well in the East Midlands ranking as the second strongest sector, with food and drink in first place and rubber and plastics in third.
On the other end of the scale was the South East, which recorded a GVA of less than ten per cent. Overall, output was weak in the region, but electronics and pharmaceuticals did manage stronger performance than other areas.
Domestic Market Holding up the Market
Back to the PMI data and it's clear that it's the domestic market that is keeping things moving as the sterling-euro exchange rate continues to sap export demand. Mr Dobson added: “The struggling manufacturing sector, and the impact of the strong pound on export performance, will be a worry for the Bank of England.
“However, with the goods-producing sector accounting for only one-tenth of the economy, these woes may take second place to the health of the far larger services sector in determining the timing of the first interest rate hike, suggesting firms will have to adjust to the pound trading at its current highs.”
What will all this activity – or lack of activity – do to the number of manufacturing businesses for sale?
Clearly the slow performance from manufacturing is having an impact on how buyers feel about the arena. Analysis from law firm Irwin Mitchell, using data from Experian, found that M&A activity among Yorkshire-based manufacturing companies dropped by 44 per cent in the second quarter of 2015 in comparison to the figure for the first three months.
Yorkshire wasn't top of EEF's regional analysis, but it wasn't bottom either, showing between 14 and 15 per cent GVA.
Andrea Cropley, partner and head of corporate with the law firm in the north of England, said she expects that activity will remain subdued until “the sector as a whole shows signs of consistent improvement”.
Our team at the Business Sale Report posted 21 manufacturing businesses for sale in July. It certainly wasn't our most popular sector for listings or for potential buyers looking to buy; perhaps wisely many people are holding off and waiting for improvements before investing in the creeping industry.
For some more experienced buyers, it might be the time to find bargains as people look to offload businesses or divisions in the underperforming industry. But if such a leap of faith is to be taken then due diligence will be more important than ever in assessing potential acquisitions and keeping a close eye on the market will no doubt the key.
The construction sector has had a mixed bag of fortunes this year. In June, the revised GDP figures from the Office for National Statistics (ONS) revealed that Britain's economic output had grown more than predicted and put the unexpected growth down to construction's strong performance.
The figures confirmed that GDP rose by 0.4 per cent in the first three months of the year, rather than the 0.3 per cent that had been predicted. New methods used to measure construction output were said to have played an important role with Joe Grice, chief economist at the ONS, noting that the upward revision is “down largely to the recently announced new methods to measure construction output”, which have a greater reliance on real world hard data.
Construction starts to falter
The sector might have started the year on a high, but when the ONS looked back on the second quarter and honed in on April and May it found that output dropped by 1.3 per cent between the two months, when economists had been expecting a 0.2 per cent rebound. Annual output for the sector remained up at 1.3 per cent, but there is further concern that when the figures for the second quarter as a whole come in, they will show a contraction for the three-month period.
Howard Archer, chief European and UK economist at IHS Global Insight, told the Financial Times: “There is now a very real risk that construction output contracted in the second quarter and was a drag on . . . growth.
“Indeed, construction output would have needed to grow 2.3 per cent month on month in June to have avoided contraction in the second quarter.”
Optimism remains high
Despite the dubious results from the ONS data for the second quarter, positivity in the construction sector remains high. Markit's Purchasing Managers' Index for June rose to a healthy 58.9 in June, up from 55.9 in May – any reading above 50 indicates growth.
Tim Moore, senior economist with Markit, commented: “UK construction companies experienced a growth rebound and surge in business confidence at the end of the second quarter.
“Survey respondents cited robust inflows of new work in June, adding to already strong order books across the sector.”
The data at the moment presents a mixed picture when it comes to construction's immediate future. It looks like optimism is being fuelled at least in part by the healthy future pipelines many businesses are eyeing up – such as the ten new schemes and 800 new homes in Harbur Construction's £68 million project pipeline.
Individuals and businesses looking to invest in the sector will need to weigh up the downward trend seen in the second quarter data, with the positive start to the year and the optimistic outlook of many involved the sector itself. Getting this right and finding the right niche could provide some excellent returns, but it will need close market monitoring to increase the chances of success.
After an initially positive response to Chancellor George Osborne's first Conservative Budget, businesses are digging a little deeper into the figures and finding a few causes for concern. The retail sector is among the sectors expected to be hit by some of the announcements, so we're taking a closer look at how the retail M&A market could evolve in the coming months.
The Impact of Living Wage on Retail
Mr Osborne announced the introduction of a new living wage. This will see the national minimum wage increase gradually from £6.50 an hour, to £9 an hour in 2020. The changes will mean that anyone aged 25 and over will by law have to be paid the national 'living wage', making workers in their late twenties significantly more expensive than younger team members.
For business owners operating in the retail sector, this change has the potential to massively increase their outgoings in salaries and many people have indicated that it will be the retail sector that bears the brunt of the wage changes.
James Lowman, chief executive of the Association of Convenience Stores, said that the changes will have a “devastating impact” on thousands of stores. He commented: “This will lead to retailers having to reduce staff hours, work more hours in their business and ultimately cancel their investment plans.”
Others have rejected the idea that the retail industry is being automatically seen as a low wage employer, but overall there is serious worry that the changes will dramatically increase the financial pressure on small retailers and could even force some to sell their retail business.
Before the Budget, figures indicated the expected levels of summer optimism among retailers. CBI figures showed that although growth in sales volumes slowed in the 12 months to June in comparison to the previous month, the industry remained positive.
Grocers were the main cause of the slowdown with all other major sectors reporting rises in the levels of volume growth and overall a positive 31 per cent were anticipated further pickup to be seen over the course of July.
Barry Williams, chief customer officer with Asda and the distributive trades survey chairman of the CBI, summed up the atmosphere in the retail industry: “Even though growth slowed slightly this month, retailers are not letting that subdue their hopes for the season.
“Low inflation – expected to stay below one per cent throughout this year – has given customers more discretionary income. The power of the pound in their pocket is going further and shoppers are spending more on treats, like flowers and jewellery, as well as on activities with their families.”
A Perfect Blend?
With the Budget just days behind us, it's too early to say where the industry will go. But if Osborne's policies do hit some retailers hard, it might well be time to keep an eye on retail businesses for sale and their distressed counterparts. The right buyer might be able to pick up assets for below market value or even an entire company ripe for the implementation of a turnaround strategy.
With the General Election just a week away, let's line up the parties and see just what they're promising for British businesses.
"Strong leadership. A clear economic plan. A brighter, more secure future."
Historically seen as the party for business, the Conservatives still appear to be the favourite party among British businesses, with clear economic plans in place to help those in the driving seat of businesses.
Here are some of their headline business pledges from their manifesto:
– Pursue their goal of becoming the most prosperous major economy in the world by the 2030s.
– Cut Corporation Tax from its current rate of 28 per cent down to 20 per cent.
– Cut £10 billion worth of red tape to ease SME operations.
– Continue to invest in business mentorship programmes and prioritise entrepreneurial action through access to guidance and finance.
– Build a northern powerhouse to rebalance the British economy geographically.
– Maintain economic security by running a surplus in order to start paying down the country's debts.
– Back small firms through the introduction of a 'major business rates review'.
– Provide the 'most competitive taxes of any major economy'.
"A plan to build an economy that works for working people."
Labour's economic policy tagline sums up their approach. They are continuing with their traditional values of putting workers first and, while they are pledging to bring tax changes and new working practises to benefit people across the economy, their promise to help drive business at the entrepreneurial end of the game is a little more vague. Nonetheless, they are still putting forward some strong headline pledges:
– Cut the deficit every year with a surplus on current budget.
– Focus on maintaining and improving relations with the European Union in order to increase market access for British businesses.
– Establish the British Investment Bank to support business growth.
– Maintain the most competitive rate of corporation tax in the G7.
– Prioritise infrastructure investment and low carbon technologies investment.
– Reform takeover rules and improve link between executive pay and performance.
– Devolve £30 billion of funding to regions to support more localised development.
– Cut business rates, freeze energy bills.
"Stronger economy. Fairer society."
The Liberal Democrat manifesto certainly acknowledges the need for a successful British business sector to help drive growth and continue to cut the deficit. If you operate in the finance sector, however, they're less likely to be your friends. But focused investment in manufacturing and technology innovation is likely to appeal to these operators.
Here is a selection of the Lib Dems' headline pledges from their manifesto:
– Finish the job of balancing Britain's books by April 2018.
– Allow borrowing when required for national infrastructure.
– Introduce a new Corporation Tax in banking sector.
– Maintain the Bank Levy.
– Complete plans to separate retail and investment banking.
– Refrain from introducing any plans that would require any increase in the headline rates of Income Tax, National Insurance, VAT or Corporation Tax.
– Double innovation spending to target advanced manufacturing, clean tech and digital industries.
– Improve access to finance for businesses. As part of this, continue to innovate in the crowdfunding and peer-to-peer lending areas.
– They also claim to cut £50 billion less than the Tories and borrow £70 billion less than Labour.
”UKIP is the party of small business.”
Just a few months ago and UKIP were still seen as an outside party with somewhat extreme views. Fast forward to the week before the election and they can no longer be ignored with such flippancy.
People have looked beyond the headlines towards some of the less reputable members of the party to gain a greater understanding of what UKIP are actually proposing in their manifesto and they're finding some interesting points for business, especially for SMEs.
UKIP are promising to:
– Deliver a £1 billion plus boost for the high street by reducing business rates on premises with a rateable value under £50,000 and encouraging local authorities to provide at least half an hour of free parking on the high street.
– Set up a confidential reporting channel on "late payers" with HMRC to allow small suppliers to prompt investigations into big purchasers who routinely pay late.
– Improve credit insurance for small businesses.
– Exempt small businesses from certain compliance rules when bidding for public sector contracts.
– Cut red tape on small businesses.
– Crack down on corporation tax dodgers through amending Britain's relationship with the European Union.
Popular opinion suggests that the Tories remain the party of choice for small business owners. Indeed, 5,000 small business owners were happy to put their signature to the letter calling for the Conservative-led coalition to 'finish what they started' in a letter published this week in the Telegraph.
Similarly, a study by accountancy firm Clearbooks found a strong level of support for the Tory businesses.
Their survey of customers found that 58 per cent believe the Conservatives best represent small businesses. Liberal Democrats were in second position with ten per cent, followed by Labour and the Green party who both had six per cent and UKIP with five per cent.
A new poll indicates that the majority of small to medium sized businesses (SMEs) in the UK are feeling confident about what’s to come in 2015.
The survey from OnePoll and commissioned by Liberis, a small business fund company, found that 68 per cent of SMEs are confident in regards to their business development in the coming year.
The poll saw 1,000 small and medium sized firms answer questions on the future of their company.
However, while confidence was high, and a further 56 per cent of respondents expected growth in the new year, a worrying 32 per cent – almost a third – said that they expect a decline in business. Common concerns for businesses were cash-flow problems, increasing sales and growing costs lowering profits.
Liberis CEO Paul Mildenstein explained: "It's good to see such a widespread level of confidence and expectations of growth, but it is still tough trading for a considerable number of small businesses who are concerned about cash flow and costs and need funding to help with every day expenses to see them through."
While 40 per cent of firms replied that they would be looking for outside funding to further their business in 2015, three quarters of that figure were confident that they would successfully obtain the funds required.
The bank was seen as the most favourable place to go for future investment, with half of businesses seeking funding there, and 31 per cent will search out alternative funding providers.
Buying a business is often viewed as a fast track route to growth. Read our article on Raising Finance For An Acquisition for ideas on how you could fund your next business purchase.
New research suggests that British small and medium sized businesses (SMEs) are failing customers by their inability to adequately adapt to the current digital age.
The report released by Buzzboard on behalf of digital marketing provider Johnston Press claims that 71 per cent of SMEs are unable to meet the demands of mobile shoppers, while a massive 44 per cent are still without a website.
These figures are set against a growing use of online services, as 75 per cent of consumers shop online and 30 per cent of orders on Black Friday are made using a mobile device.
The figures further highlighted firms’ inability to take full advantage of the web and its services revealing that a mere 15 per cent of those surveyed are making use of email marketing. In terms of social media, 69 per cent were without a Twitter account, 70 per cent not on Facebook and 89 per cent without a presence on LinkedIn.
Commenting on the release, managing director of Johnston Press’ Digital Kitbag service Chris Brake, said: “Digital opportunities offer huge potential for SMEs so it is shocking to see so few are getting this right.
“SMEs are in a prime position to drive the UK economy, but to fulfil their potential they must recognise the importance of digital and also take advantage of the numerous sources of help and advice available to them.”
Trevor Nadeau, BuzzBoard managing director EMEA, added that education was needed to help small businesses in the UK to fully benefit from a digital presence.
Acquisition could be the perfect answer for many companies struggling to adapt to the digital age, view our listings of businesses for sale to find potential bolt-on opportunities which could help you grow.