Finding the right investor with the right style and level of involvement is challenging, but remember that meeting potential investors is as much about you picking them as them picking you. With this in mind, here are some key things to bear in mind, from the people who should know – the investors themselves.
Posted on 28th August 2013 in Corporate Finance .
The best way to prepare your business for sale is to put your mind into that of the buyer. Consider what buyers and their advisers will be looking for when they come knocking on your door. If it’s not available they’ll lose confidence. If they lose confidence, the deal may collapse or you’ll end up on the back foot, compromising on your terms or accepting a lower price.
Some purchasers like to buy businesses in distress. These are generally accessed through insolvency and restructuring practitioners (IPs) and can sometimes be great bargains. However, there may be challenges and pitfalls to face along the way.
It may be exciting, but it’s generally accepted that badly targeted or poorly managed acquisitions destroy value far faster than they create it. Don’t be one of the many losers. To get it right you’ll need patience, a cool head and a process to keep you on track:
The last few years haven’t been great for the UK economy, have they? We lost a couple of our Triple-A credit ratings (thanks for the vote of confidence guys), had a near miss with a triple-dip recession and saw a number of big name high street retailers slip under the waves of the financial storm. Bad news all round, but things appear to be looking up.
The difficulties in the current job market mean that your employees are less likely to move jobs in a hurry. Most businesses are still trying to keep costs at bay and it’s important to remember that your staff will be motivated by more than just money.
The success and growth of your business depends on your employees contributing effectively to your business objectives and priorities. Their contribution is a blend of achieving objectives (the ‘what’ of the job) and behaviour (the ‘how’ of the job). Both these aspects need to be based on clarity of what is expected, fair and meaningful measures, and regular feedback.
Employing people is usually the biggest cost and headache for most businesses; for companies to be successful, they need to attract, motivate, reward and retain the key individuals who will make this happen. This takes the form of reward, usually in cash, but a sense of ownership is also a huge incentive for those concerned.
The enterprise management incentives (EMI) scheme is a tax-favoured share option scheme, designed to assist smaller and/or entrepreneurial companies to recruit, incentivise and retain employees. This is done through the offering of tax-advantaged share options in the company as an alternative to cash rewards such as bonuses.
A well-drafted business plan is crucial when raising finance or trying to attract investment, but it is also, of course, an essential tool for the successful management of a business. A carefully researched ‘roadmap’ which includes the right information provides focus, prevents business drift and reduces risk.
Business owners should set aside the time early on in their relationship to discuss and implement a shareholders’ agreement, as it will almost certainly help to avoid the disruption and additional costs involved in resolving any further disputes.
In their book, Growing Your Business: A Handbook for Ambitious Owner Managers, Gerard Burke, Liz Clarke, Paul Barrow and David Molian describe the owner-manager as developing across specific roles over time. These roles include ‘artisan’, ‘hero’, ‘meddler’ and ‘strategist’.