Wednesday, 2 October 2013

Leaving the Forces and looking for a new career on Civvy Street?

How do I choose the right business for me?

With a boom in specialist recruitment companies there is a significant sector aimed purely at supporting ex-forces find work, however, had you thought about becoming your own boss and running your own business?
Forces personnel are highly recognised for their high levels of training and commitment which are the type of skills that are often required to run a business. 

Setting up your own business can be a daunting prospect which is why a ready-made business which has been vetted by a business broker such as Axis Partnership is an attractive proposition.
Facing redundancy is a daunting prospect but this can be turned in to a great investment opportunity for you, your partner or family member. 

The Axis Partnership has been helping clients throughout the UK for more than 16 years find the right business to buy. 

As well as staying with you every step of the way we have a network of tried and tested professionals that will help you whether financial or legal help is required. 

Things to take into consideration:

  • What is my existing skill set?
  • What are the barriers to entry for a particular industry?
  • Is training readily available?
  •  Will the business owner provide a comprehensive handover?
  • Is this a family opportunity or something for just myself?
  • How long will it take once I have identified a business I would like to buy?

This will really depend on the type of business you are looking to acquire, something small for yourself such as a lifestyle businesses or perhaps something that could involve the family.

For more information or an informal discussion please call one of our team today for further information 0800 977 5855 | 01284 716000.

Friday, 9 August 2013

6 Things To Consider When Buying A Business

  1. What is your strategy?  Geographic penetration? Buying along the purchasing chain perhaps?  Becoming the biggest in your sector or are you going head to head with your closest competitor? Quick growth, to take your business to the next level? Think about how this business will fit in with the rest of your existing business activities. 
  2. Do you want the business assets or just shares in this company? An experienced business broker will be able to explain the advantages and disadvantages of the different options open to you and what the seller is prepared to do.
  3. What are the benefits to your existing business portfolio? Will you be adding value? Will you be enjoying economies of scale?  
  4. What are the long term implications?  Have you carried out a PESTL audit of the current economic client home and abroad? What are the current marketing conditions?
  5. Ensure the business broker provides a strong Information Memorandum and associated papers before making a commitment.
  6. What support will the business broker  offer?  Will they attend meetings? Can they recommend professionals to act on your behalf to minimise risk during the buying process and also keep costs down?
Gill Evans, Marketing Manager

Wednesday, 7 August 2013

Ten Top Tips When Selling A Business

  1. Presales planning is an essential part of your exit strategy which can take several years to prepare.
  2. A solid management structure is essential and migrates risk for a buyer.  An organisational chart, succession planning, training, policies, processes and procedures shore up an essential management structure in business.  Are good people going to stay? If not have you succession & training plans in place to bring on other talent within your company?  If things typically fall apart during your annual holiday, how will things last when you sell?
  3. Maintaining confidentiality is of upmost importance, leakage can destabilise not only your clients and order book but also your staff and management team.  Your buyer will also not want things to be announced too soon either.  Two weeks prior to the agreement being formalised is typically the timescale for making 3rd parties aware.
  4. Shareholder buy-in is essential for a smooth transition.  Ensure that things are resolved and in place prior to putting your business up for sale.  Dispute resolution at a later stage can be costly and disruptive.
  5. Reputation within your industry is an important USP which can stand you head and shoulders above your competition.  Are you an active member of an industry specific body? Or sit on the board of your local chamber of commerce for example?  Perhaps you are an active member of the IoD?
  6. Carry out a SWOT & business audit, ensure problems are identified and dealt with to negate trips and falls during due diligence.  If genuine problems are there, let potential purchasers know in advance.
  7. Full management accounts will be required and back-up documentation, information on leases or mortgages and so forth need to be provided in full.  This is in addition to normally annual accounting information you will be required to produce.  Your business selling agent will require this information during the valuation stage so this shouldn’t be a problem.  However, if you are looking to sell a year or two down the line keep things in order.
  8. Be open minded on the deal structure and don’t mention price too early in any negotiations.  Employing a professional business selling agent will ensure that multiple buyers are pitched to get you the best deal.  This comes with experience.
  9. A professional business broker should be able to recommend experienced accountants and solicitors.  Just because you have professionals in place and have relationships with them doesn’t mean they are best placed to handle your business sale.  You wouldn’t ask an employment lawyer to handle a divorce would you? Ask your business selling agent if they can recommend someone.
  10. Don’t take your foot of the pedal whilst selling your business, your order book and customer satisfaction levels need to remain strong and robust.  Adding value during the sales process shows your commitment to the business.
Gill Evans, Marketing Manager

About Us- Gill Evans

Gill Evans is a Chartered Marketer and a Member of the Chartered Institute of Marketing with more than 15 years marketing experience. Previously Gill has worked in B2B and B2C marketing for diverse business sectors including NST Educational Travel to household names such as The Prudential and Premier International’s consumer brands. Following on Gill founded The Cambridge Marketing Company to support small business marketing needs.  Gill’s background in marketing covers both strategic planning and tactical implementation across the full marketing mix both on and off line.  

Over the years Gill has encountered some interesting marketing challenges including at short notice commissioning Christmas Puddings for the Queen Mother’s regiments serving abroad.
In her spare time Gill has and continues to have a diverse mix of hobbies and interests.  Some of her missions have included snorkelling in the Maldives, paragliding in Greece and arresting villains in Cambridgeshire.  Gill is delighted to join the Axis Partnership as Marketing Manager and looks forward to improving ROI in terms of marketing plans, delivery and driving the brand forward.

Friday, 19 July 2013

It's Summer and the Possibilities are Endless

The Summer holidays are now upon us, and for many Business Owners this may represent the one time of year where they are able to exit the day to day running of the Company for a sufficient period of time to recharge their batteries and focus on the important aspects in their personal life; whether that be family, catching up again with friends, travelling or re-stoking once again their passions and hobbies.  This is the one time of the year when Directors get to throw the shackles and stresses of running a Company away and enjoy life, but it also presents the best opportunity to assess their current position, and ultimately answer the question every Shareholder should ask themselves – when am I going to exit my Company?

In fact ‘when’ is only part of the question, ‘how’ is equally important.  Vendors are often guilty of a spending their time in the Company focusing on the here and now, important matters that arise relating to clients, staffing or financial issues, and often the strategic planning for their personal exit is often overlooked, and regarded as a secondary requirement to ensuring the Company is a success.  Often however the two go hand in hand more than Vendors realise in a Business Valuation, with the value and desirability of the Company proportionally increasing with the Vendors awareness and implementation of a gradual exit.

Thinking of this logically, as a Buyer what Company would you pay more for – one that the Vendors have focused on growing as fast as possible, and therefore have concentrated and invested all their time and efforts in making it a success, but merely serving to creating an infrastructure that is reliant heavily on their input.  Or a Company where the Vendors have planned an exit for a 3-5 year period prior to taking to market, ensuring that the operation is fully managed and the clients long term and secure?  Buyers are purely concerned on risk, and no matter how profitable or fast growing the Company is, if the risk element in any area is high, the price you will receive will plummet accordingly.

This is why the Summer break is an ideal time for a Business Owner to take stock of their plans.  It may be that you have no intention of selling for 5 years, but would you rather start to implement gradual changes working towards a plan to achieve a smooth exit now, or frantically attempt to ‘shoe horn’ them in when you are in discussions with a Buyer and need to sell?

My advice for all Vendors over the Summer holidays is to enjoy the break, you have earnt it, but spend a few hours contemplating when you are going to exit, and how.  By starting to independently appraise your Company today will allow you to exit for the maximum amount, and ensure you can enjoy much longer holidays in the near future!

We can offer you a Business Valuation and provide you with further advice on how to go about your planned exit.

Adam Croft, Senior Business Broker

Tuesday, 16 July 2013

About Us- Adam Croft

Adam Croft
Adam Croft has worked at the Axis Partnership since 2005 and is a Senior Business Broker. Prior to working for Axis Adam was employed in Her Majesty’s Armed Forces, including serving a tour in Iraq.  With qualifications in management, Adam oversees the sale of all Companies currently instructed by Axis and his responsibilities include the training of staff.  

Specialising in the sale of businesses within the Recruitment and Healthcare sectors, Adam has been involved in negotiations with Companies located in Australia, America and mainland Europe, and has experience in brokering deals with Groups with multi-billion pound turnovers.

About Us- Richard Haden-Scott

Richard Haden-Scott
Richard Haden-Scott is the CEO of Axis Partnership and as founding director remains at the helm, having established the business originally in 1996. Richard’s role within the business encompasses strategic planning, training, overseeing business valuations and advising business owners how best to prepare their businesses for sale, ensuring maximum rewards.

Prior to acquiring the business Richard was an independent business consultant advising various businesses on growth and development strategies and implementing training programs.  

About Us- Robin Boxall-Hunt

Robin Boxall-Hunt

Robin Boxall-Hunt is our Managing Director at Axis Partnership and has over 13 years’ experience successfully selling a broad range of businesses. Robin has also built up specialist divisions within the Axis Group including the disposal of licensed properties such as Pub’s, Restaurants and Hotels. Having run and sold his business Robin is ideally placed to support business owners through the sale of their own businesses.  

Robin’s primary role is to effectively manage the day to day running of the company, which includes staff, clients, and budgets. Part of his role is to utilise company assets and other resources to increase profitability through cost effective and time efficient policies, whilst focusing on the long term strategic planning. 

Thursday, 18 April 2013

Due Diligence When Selling A Business

Selling a business yourself?

Business Owners negotiate and agree deals on a daily basis, whether this be with suppliers, clients or even agreeing staff terms and contracts.  This means when it comes to selling a business, they already have an abundance of skills and experience to ensure they achieve the best deal for their Company.  Quite rightly, when it comes to selling or buying a business numerous clients I meet with advise me that this is an area that they are confident of conducting themselves, and do not see much value in instructing an agent for something they are more than capable of handling.  Whilst this may be the case for some business owners, when I explain to them that the sale or acquisition of a Company is not just about the negotiation of the deal and agreeing terms at the outset, but a lengthy on-going process for sometimes 3-4 months, they seem surprised.   So why can the sale of a Company potentially become so complicated?

The first critical part of the sale of any Company is confidentiality.  Sellers are wary of the details of them selling a business becoming common knowledge, whether it is being leaked to staff, clients or competitors.  Therefore the process of providing information in a ‘drip feed’ manner to interested parties is a must, helping to protect the Company’s identity and eliminate casual interests.  Even when a purchaser is identified as being serious and they meet with the seller, it is common that details regarding clients and contracts are limited until the terms of a deal are agreed.  At this point, when both parties agree a deal, some sellers believe that negotiations are over and as with the sale of a house they just need to sit back and wait for the solicitors to draw up the contract and the cash to hit their bank account.  The buyer, however, quite rightly sees this just as the start of negotiations.  They have made an offer without seeing all of the required information, and until they have fully assessed every aspect of the Company in their minds the price is not finalised.

What is Due Diligence?

Due Diligence is the terminology given to the stage whereby the buyer will be allowed access to all areas of the Company, to fully allow them to assess every aspect of it, to confirm the suggested areas of strength and growth, as well as view any potential issues which had not been disclosed.  Due Diligence consists of 4 main areas – Legal, Property, Financial and Operational.

Organising and prioritising these 4 areas is critical to ensure that momentum is maintained and the deal progresses.  The Legal aspects will relate to providing evidence of the Company’s incorporation, registration at Companies House, allocation of shares and stock transfer documents to name but a few.  Instructing a solicitor who specialises in mergers & acquisitions is critical for this stage, as this information will tie closely in with the Warranties & Indemnities and Disclosure Letter.  The Property aspects will concern the current lease and novation of this across to the purchaser removing any personal guarantees in place, or in the case of a freehold carrying out an independent valuation or creation of a new lease.

When selling a business, what difficulties might you encounter in Due Diligence?

The main area where deals fall apart with buyer and sellers dealing directly is in relation to Financial Due Diligence.  Typically a buyer will base their offer on historical accounts, or on as up to date management figures as are available.  Sellers tend to assume that this is the end of negotiations; however this is not the case.  Experienced buyers will instruct chartered accountants to carry out an in-depth analysis of the Company’s financial performance, typically over the last 12 weeks.  This review will reconstitute the profit & loss, recalculating the current turnover, gross profit and expenditure costs in order to provide the latest figures in line with the method used to agree the initial valuation.  I am sure you have all heard horror stories of colleagues in the business world who recall how they had deals agreed only for the buyer to ‘move the goalposts’ or change the deal at the last minute.  These stories relate to the Financial Due Diligence, and whilst there are some buyers out there who will use information to their advantage to get the best deal for them, more often or not it is because the buyer is locating funding from a bank or venture capitalist who will only value based on the information provided by the chartered accountant, and therefore the deal falls apart. 

So how can a broker help?

Understanding how buyers, and in some cases their backers, will operate throughout Due Diligence is critical to maintaining momentum and successfully selling a business.  Instructing brokers who are aware of what is standard, what is commonplace and more importantly what is not, allows you to plan for potential problematic circumstances, and will ensure that you are being guided accurately through this crucial time.  Brokers will negotiate every aspect of Financial Due Diligence, ensuring the price you had agreed is not ‘chipped away’ during the process, eliminating buyers looking to wear down the sellers by prolonging the sale in order to achieve the best price.

Ian Charlesworth, Senior Valuer

Wednesday, 10 April 2013

How Does Your Sector Affect Valuing A Business?

Along with marriage, divorce, moving home and death, selling your business is something the majority of people will only ever do once in their lifetimes.

It could be to realise funds to start a new business venture or to allow the continuing trading of a business that is finding itself in troubled times. It could be due to the business finding itself in a stage of stagnation, or perhaps it’s just because you have worked hard and it’s time to cash in on your efforts and enjoy that early retirement. You must, must, get it right, as you won’t be able to get back either your hard earned cash or your company once it’s gone.

For me, the whole “What is my business worth?” and “How has it been valued” question is probably the most important part of this journey you are considering to undertake. For if we get this part wrong from the start, the whole process or journey could be doomed to fail.

Therefore I will now discuss one of the most important things you must consider when valuing a business:

Well meaning business brokerages that do not have experience in the various sectors of business sales will often employ a “smokes and mirrors” attack on naive sellers, promising them huge multipliers (also forgetting to mention “deal structure” throughout the initial discussions) just to get their instructions to sell their business. This normally culminates with them handing the seller a hefty instruction fee for their “expertise” with no promise of success and being tied into a contract of exclusivity that could end in either a lengthy battle to escape from such a clause or a business not selling, which ultimately could be detrimental to the business, your nerves or personal life.

We have found that understanding your sector and how potential buyers value their targets can often lead to sale values of over 400 percent higher the results gained by inexperienced brokers. A great broker will also utilise a number of methods of valuing businesses to not only achieve you a higher return for your hard work, but more importantly to realistically justify this to a potential buyer. Ultimately it doesn’t matter how you package the valuation, it all comes down to one question: “How much cash is going to end up in my pocket?.”

A Senior Broker here at Axis recently had a conversation with a person considering the sale of their business that had just had another meeting with a potential corporate company that specialised in selling SME businesses. They had been told to “never accept any offer that was based on a multiplier of anything less than at least 7 times”. 7 times filed profit? 7 times adjusted profit or EBITDA?

Quickly, we reassured the vendor that this indeed could be right, but as previously stated, before we either confirmed or rejected whether his prior advisor was indeed correct, we probed a bit deeper into his business and sector of trade.

As previously stated, the first point of call made by a good business broker is the sector of work that the potential vendors company trades in. Once we understand this, and a whole raft of other information I shall discuss later, we at Axis would then consider what method to value such a business first. As I will show you, if any business broker is being genuine then they must fully consider this information first before offering any REALISTIC goodwill value, full share value or deal structure to any vendor.

The company my Broker was talking to traded in the Lettings & Estate Agency sector, which we all know since the start of the recession has been affected greatly, with a large number of company owners having to either down size, sell at a reduced sale value or even, I am afraid, fall by the way side.

So let’s assume some figures for the client. Say, a £1 million turnover with £50k filed profits. (Based on a national average of 10% management fee)

So based on his previous advice by the inexperienced corporate broker, they suggested, “Never sell for anything less that at least 6 or 7 times your profits and we would be aiming for nearer 9 times!”

So a bit of quick maths suggests that his “goodwill” value would be in the region of circa £300k to £450k for the sale of his business. Up to 9 years worth of profits, and surely a sign of serious intent from a purchaser as it would mean a return on investment of 9 years!! That’s a long time for a buyer, especially if it’s a venture capitalist backed group pulling the purchasing strings.

Quite rightly, compared to the multipliers of 2, 3 or 4 he had been told from other brokers or his accountant, he was eager to accept such a promise from his potential advisers. But quickly my Broker stepped in a saved him from such an almighty potential error.

Calmly and logically, my Broker explained to the vendor, that this indeed sounded a very good offer, but let’s study the suggestions made by the other corporate broker in a little more detail.

“6 to 9 times”. This consideration for goodwill is based on 6 to 9 times the companies filed profit of £50k, hence a “goodwill” value of £300k to £450k.

So lets consider a common method of how Axis, other Brokers and the vast majority of the accounting and financial world are valuing a business, IE. On the “EBITDA” method. This basically means putting back into the company’s accounts any costs associated with the current owners accessing their cash in the most tax efficient way possible, and also any costs incurred by the current owners due to the way they manage the business etc. This inflates the filed profit figure before Tax and Depreciation up to what we refer to as an “adjusted net profit”.

Typically your accountant would afford you multipliers when valuing with this method of anywhere between 3 to 5 times EBITDA. So in this case, when considering the vendors accounts, it gave an EBITDA of £100k which would suggest goodwill values of between £300k to £500k.

Can you see where this is heading? The vendor could quickly see that by using a “smokes and mirrors” approach, the crafty broker had flashed large multipliers about which on the face of it looked too good to be true, when in fact, they were not too good to be true, but were really in a way, not different than the norm!

But we are not finished here. Again my Broker, using testimony and examples of recent deals completed, explained further still how understanding your company was even more important than this potentially fishy subject of “Multipliers”. You see Axis has been one of the major players in the sale of companies in the corporate sector for over 16 years now, and this is something we pride ourselves in. We have facilitated deals with many of the major “Blue Chip” company’s right down to one man band businesses and from Scotland to Lands End and feel we have the proverbial “finger on the pulse” of such sectors in the current SME market. So did we agree on this method? NO!

You see, understanding the sectors like we do, we explained that in fact the majority of the UK market that specialises in the Lettings & Estate Agency actually values on a method where goodwill is calculated on a multiple of its “Fee income” or to less experienced brokers, “Turnover”.

Both recently and historically, Axis has negotiated sales values for goodwill based on multipliers of up to and over 2 times a company’s fee income. In this case, suggesting our client’s value for goodwill would actually be in the region of circa £2 million pounds and not the previously suggested value of only £300k to £450k! This, on their method, should have equated to multipliers for goodwill of around 40!

After allowing for the client to put his chair right and pick the phone up again, the Broker forwarded over both previous testimonies and current marketing information of similar companies to his that we had recently sold and were currently marketing. Not only to justify our valuation and methods, but to also reassure him of our good intentions to look after him as a client and not just to gain his instruction and hefty consultancy fee, as unlike other corporate business brokers the majority of our fees are performance related, and not upon instruction.

So to summarise, I am not stating that the other methods suggested by other Brokers are wrong or flawed, as saying “ours is the only way!” is not only wrong but arrogant. Being honest, depending on your sector of trade this will and can be a method we use when valuing a business. But I must strongly reiterate the importance of finding a broker that understands your sector or work, your business, and more importantly how the market values and buys businesses in your sector. Any competent brokerage will be able to sell your business, it’s just they will potentially sell if for a sum far, far less that it is potentially worth and that you deserve.

Ian Charlesworth, Senior Valuer

Monday, 8 April 2013

How To Sell A Business And Get Up To 40% Extra Cash In Your Pocket

Being the Senior Valuer here at Axis, I am normally the first point of call for clients considering selling their businesses, and therefore first in line to answer a whole raft of questions relating to how to sell a business and the business sales and marketing process.

Selling businesses can realistically be a very straightforward process, and when the two parties involved are in agreement, it can be quick, pain-free and completed with very little stress for either party. Being realistic though, this is not normally the case, with buyers playing on the naivety of a seller. This is why vendors will often call in the help and guidance of business brokers such as Axis to take the stress and hassle out of selling a company. This then allows them to carry on with the day to day tasks of being a business owner, a point which is often forgotten, and can be hugely detrimental to a company’s future for both the seller and the buyer.

Part of our service offered to clients, which is often grossly overlooked by Vendors when selling a business off their own backs, is to look at the bigger picture. Not only should consider the obvious details when negotiating a sale, like “how much are they going to pay me for my business, and when”, but a main point which is regularly overlooked is the Vendor’s Tax standpoint, and their Asset or Balance sheet value.

The buzz words here for people to consider are “Entrepreneurial Tax Relief”. In layman’s terms for people like myself  it basically means that if you have owned a trading company for more than 12 months, then you potentially only have to pay 10% Tax on up to £10m of your lifetime gains through company disposal (I always suggest seeking professional Tax Advice).

This is an example of how a simple piece of advice and professional brokering from someone like Axis can make you that huge potential gain in your overall return on your life’s work. It is not only the “Goodwill” value that benefits from this tax relief, but also potentially your Balance Sheet / Assets. Let me give you an example of how Axis managed to help a client realise a higher return from their company disposal:

We had been brokering a sale for a client in the recruitment sector recently that had a “Goodwill” value of circa £1 million, but also had Cash and Assets within the company of around £1 million. The client’s first instinct was to draw down this cash; as they quite rightly stated, “It was my cash”. This is something hundreds of company owners are saying and doing all around the country as we speak but unknowingly to their huge loss. Our Senior Broker who handled the sale quickly stated that this was not the best course of action to take at present, as Axis often has great success in selling this cash for its clients. If this is achievable, then the Tax saving for the client is potentially huge. Ultimately, if we could not sell the cash then, quite rightly, it was yours to “Draw Down”. Luckily for our client, the purchaser was happy to work with them as part of the negotiating process and helped them secure their hard earned money at this far more advantageous Tax rate, and in this case, securing them nearly an extra £200,000 worth of cash! This money would originally have been written off through having both no prior knowledge of this Tax break, and no professional advice.

Summing up then, most business owners out there are perfectly capable of finding out how to sell a business and doing it themselves, and require no help at any stage of the process. But for the majority of Vendors out in the market that are considering this process, asking for a little help is not a bad thing. Is it? And it could be potentially the best business decision they will ever make. Axis will always act with our clients best interests and if offering advice such as turning your Partnership or Sole Trader into a Limited Company or LLP would enable the client to achieve better sale value, then this is something we will do, as ultimately the more money we secure for our client, the more money Axis earn...even if it takes us more than a year to earn it!

Ian Charlesworth, Senior Valuer

Thursday, 4 April 2013

Selling Your Business Is More Than Just A Great Bottom Line

I wan't to know how to value my business. Aren't profit margins the most important aspect?

The past few months, and more importantly, the past few deals we have had completed have highlighted that selling your business, and achieving either the highest value or best deal structure, does not always depend on a great bottom line. I am definitely not saying that strong profit margins are not essential, in effect they are. But I always inform clients that the primary factor which drives a purchaser’s mindset when buying a company, and therefore the price they could be willing to pay, is why they are buying you in the first place.

Whether you have taken advice from your accountant, a financial advisor, Google or even a business transfer agent, the main emphasis is always on, “what profit are we working with?” And, “what are they multiplying it by?” If you have had that conversation, (and you may have done with me) then you were absolutely right to do so.  Every sale has to start somewhere, so why not start with a good idea of what you may be worth on traditional methods.  However where that number ends up at realistically, always falls back on why someone wants to take your company off your hands in the first place.

To what degree does this affect how to value my business?

When you come to market, a purchaser may make you an offer on purely a market share purchase, or just because you’re in the next town down from them, and therefore they may not always the best person to offer you the greatest return on your investment, or the best deal structure moving forward.

From my point of view, I want a buyer for my client that NEEDS their business for a multiple of reasons. Geographically, market share, complimentary service or sector, staff knowledge, brand goodwill, I could go on. The more of these I can tick off, the better, and can only help make THAT buyer spend more money than the next.

Therefore when you start to think about selling your business, not only do you need to get specialist advice on the realistic sale price, but it can also be a worthwhile exercise to sit and think, “Why would someone want to buy me, and why would they pay me a premium price?”

My colleague Adam Croft always says the same thing, “Two companies with the same turnovers and profits, are not always worth the same money”, and he is absolutely right. Now sometimes there is not a great deal you can do to increase significantly a value of a business other than increasing your profits. But understanding your business, and what makes it special or stand out, will help you understand how far that sale value could go, or, at least realistically get you to understand how far it may not.

So how can I best gain control of this process?

TIME. Time to understand your business and realistically how much it’s worth, and from my perspective, time for me to find you that buyer that just NEEDS your business rather than just wanting it.

Two deals we have completed recently have over achieved on “the norm” due to this sort of thing happening. One was valued at around four times its adjusted profits or EBITDA, but completed at nearer to eight! Yes eight! But both have also received large amounts of cash on day one and with deferred payments rather than performance related deals. The buyers in both cases NEEDED that purchase to go through, and boy did we make them maximise this need.

Other deals look like they could be heading this way, and time, like I said is key for me. The longer you can let me have to find that buyer, the more chance I have of finding them for you.

Therefore while the year has started off well, premiums are starting to rise and deals more favourable, why not drop me an email or give me a call to discuss how I can proactively and confidentially afford you a bespoke brokering service?

Ian Charlesworth, Senior Valuer

Friday, 22 March 2013

Reflections After the Care Show- How is the Healthcare Market shaping up for 2013?

A common question I was asked over the two days at the Care Show in Bournemouth was how the Healthcare market was comparing against other sectors, and the forecast for M&A in Healthcare for 2013. 

When selling your business UK Healthcare remains a desirable market due to the continuing demographics of the UK, and the opportunities that remain within the industry for growth in conjunction with offering a high quality service to clients, though there are several areas of potential concern for Healthcare owners and those considering investing in the industry.

The first is that if your Care Home or Home Care Agency is reliant on Local Authority work, namely receiving referrals from the local Councils to ensure your Home is running at full occupancy or that you have sufficient Domiciliary Care clients to remain profitable, then your Company is only as good as your relationship with the Local Authority and only as profitable as the Charge Rates the Local Authority is willing to offer.  Numerous Healthcare Owners whom I have met over the last few years have told me of the increasing pressures they are receiving from Local Authorities to reduce Charge Rates whilst offering the same level of service.  Putting this into simple Accountancy terms on your Company’s Profit & Loss this means for every £ taken off the Charge Rate and in effect your Turnover, this drops straight off your bottom line profit.  This ultimately squeezes the margins that you are working on, and brings into question whether the historic quality levels can be maintained, or whether the Company will need to reduce the level of service clients have grown accustomed to receiving in order to remain in business.  These are issues which rightly concern CQC and Business Owners alike, and why more and more Vendors are proactively looking to expand into the Private market.

The second point is relating to the short term attractiveness of the Healthcare sector, when compared to other external industries or even on a regionalised basis within the Care industry.  It is common at present for different Local Authorities to offer different Charge Rates for exactly the same service, resulting in Companies being able to achieve variances of over £10 an hour in different parts of the Country.  Considering an external Investors criteria for one moment, would you be more drawn to acquire a Company in a higher Charge Rate area, or one that offered exactly the same type of care, required the same effort, time and work, but would ultimately be 30-40% less profitable?  The main criteria of Acquirers when assessing a Healthcare opportunity are quality and profit; if one of these is significantly below the average then the interest, along with the value, will diminish accordingly.  The other aspect is to assess the attractiveness in the short to medium term for external investors when comparing the Healthcare industry to other sectors such as IT or Oil & Gas.  With the well documented Government agenda to reduce Public spending, and Healthcare seen as one area where cost savings can be made, Investors are reviewing and calculating quicker return on investments being made from these ‘recession proof’ sectors.  This reduces the number of external parties acquiring into the market, and as demand reduces, so does the values achieved within the market.

There were a few highlights in the Healthcare M&A world in 2012, notably the acquisition of Harmoni by Care UK and Enara by Mitie, the latter hopefully the instigator of Facilities Management Companies looking to broaden into the Healthcare market in 2013.  However the main issue holding back the number of M&A deals to pre-2008 levels remains funding.  Over the two days of the show I spoke with numerous Bank Managers for all the main high street lenders, and the story was the same for all, one of cautious optimism for the sector, an understanding of the restrictions preventing the release of equity, but ultimately a sense that their hands would be tied for some years.  This leads to an issue whereby individuals who have worked within the Care sector for numerous years, who are driven by ensuring quality levels are high and wish to go alone and branch out for themselves come up against a brick wall when attempting to secure funds, and as a ‘first time buyer’, with limited assets, Banks require this individual to raise personally anywhere up to 65% of the total consideration.  In today’s climate this is unrealistic, and therefore means the number of ‘care people’ becoming owners is reducing year on year.  This void is filled by Venture Capitalists, Private Equity Firms and Investment Consortiums on ‘buy and build’ strategies; however their focus is on maximising profits, not necessarily on improving care quality.

So in summary the Healthcare sector at present remains a sector of great interest to Purchasers, offering potentially high levels of return and in one of the few markets where predictions of growth for the next 10-20 years can be justified.  However in the short term, with the memory of a recession still in the back of people’s minds, and the continued sluggish nature of the economy and continued government cutbacks, the sector is on a knife edge.  If you are selling your business UK Care Purchasers and the M&A market in general are continuing to tread with caution until these concerns are alleviated.

Adam Croft, Senior Business Broker

Tuesday, 26 February 2013

Axis to attend Care Show 2013!

Come and Meet the Team at the Bournemouth Care Show – 19-20th March 2013

Following the success of last year’s show we are delighted to announce that we will be exhibiting at the Bournemouth Care Show again this March.  Please put a date in your diary and come and meet us!

Over the years we have built up a strong presence within the Healthcare sector enabling business owners to realize the full sales potential of their businesses and gain the maximum sales value.  Whether you are planning to sell your business now or in the future we would be happy to hold informal, no obligation discussions with you during the show.

We have secured the same great space as last year, just outside the seminar rooms in Windsor Hall, so please come and meet the team.

To read the full press release please click here: Press Release_ care show 2013.pdf

Robin Boxall-Hunt, Managing Director of Axis Partnership

Thursday, 14 February 2013

I Want To Sell My Business Fast- Avoiding Procrastination

I want to sell my business fast- how can I speed things up?

Money loves speed. On the other hand procrastination kills speed (and takes us away from potential money we could make!). If I'm determined to sell my business fast, I need to keep my productivity in gathering information and marketing my business up. 

Here are 11 powerful tips to overcome procrastination and speed up your productivity:
  1. Bite Size tasks: Make each task to be accomplished small enough to get started. Even writing a book can start with a small task like outlining or writing the first few words. If you are planning to run and find it difficult to get started, forget about the whole running process and commit to just one simple task – put your running shoes on. More often than not you will end up doing a run.
  2. Kill perfection: Trying to get it perfect will stop you in your tracks. It does not mean you have to do a bad job. Start the task or project in any form to get it finished. When it’s finished you can look for ways to improve or make it better.
  3. Change your ‘internal’ dialogue: Rather than say ‘I hate doing it’ why not say ‘I choose to do it’.  This will empower you to start it off even though you may not like the task (like tax returns etc). If you are having a bad day, it is easy to put off doing things as you are not in the ‘mood’. Don’t let the ‘mood’ control your life. Change the dialog to ‘I will start this now’.
  4. Get a reward: Set rewards for accomplishments. These rewards can be simple treats at the end of tasks. I do not like sitting in my office for more than 45 minutes. So if I have to do something that is going to take 60 minutes, I look forward to finishing it so that I can treat my self to a brisk walk and cappuccino.
  5. No distractions: You are in control of everything that distracts you. Turn the phone off (unless your task involves using the phone), move away from all ‘surfing’ devices and get on with your task. If you are likely to be interrupted by co-workers and visitors make arrangements not to be disturbed.
  6. Worship your diary: Block out time for all the important tasks in your diary and set reminders if necessary. Let the diary guide your day. Get the key tasks done as early as possible as this allows you to be flexible later in the day to ‘react’ to unexpected events.
  7. Get accountability:  Have someone (a colleague, co-worker or a coach) hold you accountable for finishing certain tasks. I share my diary with my coach. I hate giving excuses to her as to why I did not complete some tasks. This motivates to get on with it.
  8. Review your time: Each day, review what you have accomplished. This is one of the most frightening exercises. You will find hours within the day that you cannot account for in terms of accomplishments. Our life is short and too precious to be wasted by procrastinating.
  9. Clear Clutter: Although procrastination is function of your mind, physical clutter around you adds to your mental clutter. Your desk (or desktop) should be a place for job in hand and clutter free. Clutter adds to your frenetic mind and nothing else. Get rid of it.
  10. No multi-tasking: Successful multi-tasking is a myth. It gives us an illusion that we are contributing towards productivity.  It is there for overly scheduled and stressed-out people to feel productive and efficient. Under the illusion of multi-tasking we are in fact ‘serial tasking’. That is jumping from one task to another but think we are multi-taking (working on all those tasks at the same time!). Focus on one thing at a time until it is done!
  11. Make a decision: Make a deliberate decision to fight procrastination and become a high productivity person. 
Richard Haden-Scott, CEO of Axis Partnership

Monday, 11 February 2013

Is Private Equity the Best Deal?

In the current press we hear a lot about financial buyers and about how they are filling the void left from the Banks restricting funding. However, when deciding how to sell your Company often a strategic buyer - a bigger Company whose goals complement yours - is the best buyer for you, as they will pay a higher value and require you less post sale.

In the world of middle-market acquisitions, there are generally two kinds of buyers. Financial investors, like Private Equity groups or Venture Capitalists, are in the business of buying and selling Companies. A strategic acquirer, on the other hand, is another Company in your industry that thinks your business would be a great addition for them to help grow and strengthen their market share.

When you’re ready to sell, a strategic acquirer can be the best match for you, but it takes a little more work to get to them. Here’s why:

1) Buying companies is not a strategic acquirer’s primary focus

Financial acquirers are in the business of investing in companies and seeing a return on that investment. Day in and day out, they look at confidential information memorandums, send out indications of interest and letters of intent, and negotiate the purchase or sale of portfolio companies. The process flows (comparatively) smoothly because financial acquirers literally exist only to find companies to buy and sell.
Strategic acquirers, on the other hand, have plenty of other things to do. Their primary purpose is to maximize the value and profits for shareholders. They're busy developing new product lines, growing their customer base, coming up with new advertising campaigns, conducting market research. These Buyers are spending their time trying to make their profit & loss reports look good, not focusing on buying and selling smaller companies, so it’s harder to get their time and attention.

2) It's hard to find the right person to talk to

Take a look at the website of any private equity group, and within 30 seconds you'll be able to find full contact information for each of their partners. If you’re lucky, the partners will be neatly sorted by industry specialty. And you can get them to take your calls and look at your confidential information memorandum without too much hassle. After all, that's what they're there to do.

By contrast, reaching out to a strategic acquirer can be extremely difficult. Let's say your Company places specialist engineers for the aerospace industry. You want to sell the Company and you’re pretty sure that Hays would want to take a look at you. Do you know how to sell your Company to them? Where do you start?

Well, Hays has divisions and different Companies who specialise in different placements, whether that be commercial aerospace, defence and government contracting, space, security and technology solutions, to name a few.  Each Company is autonomous and has its own goals, strategies, business development teams, relationships with corporate management, and political manoeuvring. And each division may approach acquisitions differently.  In one department, the business development people may be actively charged with seeking new companies to buy; in another, they may be limited to managing the process.

It takes a lot of research and legwork to drill down into each of these departments, determine your best contact points, and try to actually reach those people. Three FDs may slam the door in your face, but the fourth could be looking for a Company exactly like yours to expand their particular section of the Group.
Then you get to do it all over again for Michael Page, Reed, Impellam Group and anyone else you think might be interested.

The extra work is worth it. Here’s why.

1) You’re much more likely to get a deal completed

Once you’ve developed a strong relationship with the right person at a strategic acquirer, you instantly have the best internal flag-carrier you could ask for. This person will be an extraordinarily strong champion for you, and for this deal.  He or she had to convince the higher-ups this deal is absolutely essential. If the deal falls apart, your flag-carrier’s managers are going to be asking what went wrong: “Didn’t you tell us four months ago that we just had to buy this company before one of our competitors did?”

A Private Equity group, by contrast, will look at many companies, and start discussing what a deal might look like with quite a few of them. But they’ll only close a small number. They know that there’s another Company, and another deal, right around the corner. Once a strategic buyer starts a process, they have a very strong incentive to see the deal through.

2) The strategic acquirer is likely to pay more

The best way to get a premium price for your Company is to put buyers in competition with each other. A Private Equity group certainly doesn’t want to pass on a golden investment and then see one of their competitors take advantage of it, but they know there will be plenty more companies to look at. By contrast, if both Impellam and Hays need the exact kind of Recruitment you do, and both want to bring that capability in-house, they’re not going to have that many options. Rather than being a commodity, your Company is a unique service provider that is going to give one player a competitive advantage over the other.

The bottom line is that a bigger player in your industry is likely to care more about your particular Company, and this particular deal, than a financial investor would. Private Equity groups are more focused on the numbers: They want a profitable Company in a good industry, and that’s about it. When deciding how to sell your Company and what buyers to pursue, a strategic acquirer knows your product, sees the synergies between what you do and what they do, and wants to make the deal happen because of what it can do for their strategy and bottom line. They want to integrate you into their business model. All that means a higher price and a better chance that the deal will close.

Adam Croft, Senior Business Broker

Thursday, 31 January 2013

A Video Overview- How Can Axis Assist Me When I Sell My Business?

How Can I Sell My Business with Axis?

Here at Axis Partnership we pride ourselves on our ability to assist people considering an exit as professional Business Brokers.  This video is a brief overview to show how the assistance of an experienced agent working with you, your legal team and your accountants can help smooth the transition from initial contact and preparation through valuation, the commencement of marketing, introductions, due diligence and completion of sale.  

Robin Boxall-Hunt, Managing Director of Axis Partnership

Wednesday, 30 January 2013

I Want To Sell My Business Via A Management Buy-Out (MBO)

I Want To Sell My Business To My Management Team

Traditionally it is well documented that less than one in five business owners would consider selling their businesses to their management team.  The reasons are obvious – Management Buy Outs (MBO’s) need careful thought and planning.  However since 2008 and the impact on appetite and demand in the Mergers & Acquisitions sector as a whole, the perception of MBO’s have begun to change and they have become more popular with a number of key advantages.  As a Business Owner, do the benefits of an MBO outweigh the potential risks?

Advantages Of An MBO

So what are the advantages of an MBO?  Rather than have to go to the market place, the Buyer has instantly been found, and the Vendor will be confident that they have the same business ethics and ethos to ensure client relationships are preserved and the name of the Company and legacy is maintained.  Also one of the main advantages is that confidentiality can easily be contained in-house, removing the risk of competitors finding out that the Company is on the general market and any detriment affect from this relating to clients or staff.  MBO’s allow Vendors to be more comfortable about structuring a deal over a longer period of time than they would do with an unknown 3rd party, ensuring there is minimal disruption.  The risk involved in the change of power can therefore be minimised.

Disadvantages Of An MBO

As with everything in business there is another side to the argument, with the main case against MBO’s being that as the Vendor you are limiting the competitive number of Buyers to just one!  A Company being marketed for sale in the open market could easily generate 8-10 potential purchasers, where an offer price could be significantly higher due to synergetic or competitive reasons.  Funding is also a common problem with MBO’s and can be the main cause for the deal to fail, whereas Buyers generated from open marketing would need to provide proof of funding, normally before serious negotiations even get started.  Often Vendors find themselves having to agree to a lower value deal with the MBO team than the Company is actually worth, due to this being the maximum amount they can raise.  Also a point for note is should discussions get underway for an MBO then there could be the risk of the management team not keeping their eye on the ball and the Company’s current performance could begin to suffer.  Alternatively, and even more or a concern to a Vendor, is that should the sale fall through, the Company would be left with a severely demotivated management team.  If the Vendor then looks to take the Company to the general market this instability would devalue the Company accordingly.

The Key to Success

The starting point is to ascertain whether or not the management team will have the appetite, ambition and leadership capability to grow the business, followed by access to finance, as this is the critical part! Anyone thinking "I want to sell my business," should seek specialist help and advice to ensure that a succession plan is carefully implemented so that a flexible, staged exit can be managed, ensuring that sensitive issues and individual aspirations can be dealt with. Working alongside experts in this field can ensure that the business is made as attractive as possible in order to achieve the necessary finance and of course, allowing the Vendor to achieve the full value of their Company!

Adam Croft, Senior Business Broker

Tuesday, 29 January 2013

A Video On Due Diligence- What Happens Once A Deal Is Agreed?

When you sell your business, agreeing a deal isn't the end.

At Axis, we do more than just introduce you to buyers, we stay with you throughout the whole of the Due Diligence process.  When you sell your business, you need to be aware that there's still a great deal of legwork, preparation and negotiation as buyer's agents go through your business with a fine tooth comb after you accept their offer.  This video explains the ways Axis can assist you during this period, and explains some of the reasons we may be needed.

Robin Boxall-Hunt, Managing Director of Axis Partnership

Monday, 28 January 2013

How To Maximise A Buyers Finance Model To Your Advantage

What do ROI and IRR mean and how can understanding them help sell my Company?

All astute Business people, and in particular financially driven Buyers (Venture Capitalists, Private Equity Firms etc), will know the cost of equity and will only make investments that provide a return in excess of that cost within a reasonable timeframe.  In general terms, financial Buyers of SME Companies are looking for a Return on Investment (ROI) or Internal Rate of Return (IRR) in the range of 20-35%, depending on the sector of operation and the risks associated with that particular industry.  Providing proof to this type of Buyer that purchasing your business at your valuation expectation will allow them to achieve the IRR thresholds they are looking for is vital.  

How can I calculate this?

Here's a step-by-step summary of how you perform the analysis:
For example, if I want to sell my Company which has a £2 million value expectation, for simple terms let's say that an appropriate debt-to-equity ratio in the current M&A environment is 50 percent debt and 50 percent equity.  In this case, an acquisition of my business could be financed as £1 million in debt and £1 million in Buyer's equity.

What happens next?

1.  The first stage is to understand how the acquisition of your businesses will be financed, as this is pivotal in positioning your Company at an attractive IRR.  Talking to a finance firm, Bank or broker who specialise in M&A deals in your sector will allow you to confirm the current level of debt to equity which deals are being based on.  Once you have this information you can use this ratio and apply it to your value expectations to see whether they are realistic in the current market.  

2.  The next stage is to determine the forecasted sales, overheads and free cash flows of the business over the next five years, including the cost to service the debt amount used in the acquisition.

3.  Calculate the equity remaining for the Buyer assuming that the Company will be sold after five years at a conservative multiple of EBITDA (usually the same as the entry multiple).

4.  Use the initial equity investment determined in No.1 above, the free cash flows after debt servicing in No.2 and the equity remaining for a Buyer upon a subsequent sale in No.3 to calculate the potential IRR on their investment.

Hopefully, this analysis proves that the valuation of your business will earn your Buyers a return on investment in line with industry standards, or ideally a much more higher and attractive uplift. If not, you might have to reassess the reasonability of your valuation expectations. Effectively in this analysis, you have taken the Buyer's IRR and used it to your advantage, creating a ‘win-win’ scenario when negotiating a deal.

Valuing a Company is more common sense and financial calculations than science or magic, and of course every Buyer will value you differently, the key is to find the Buyer who will pay the highest price and effectively has the greatest need for the acquisition to occur.  If you are prepared to instruct advisors who know the market and how to tailor information for each individual Buyer, you can work toward getting the valuation you want.

Adam Croft, Senior Business Broker