Maximising the value of your business: Insights and Best ......Maximising the value of your...
Transcript of Maximising the value of your business: Insights and Best ......Maximising the value of your...
Maximising the value of your business: Insights and Best Practices
21 May 2015 | The Runnymede-on-Thames Hotel
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Welcome agenda
08:20 “Maximising value, more than just about the numbers’’
Ian Barton, HMT LLP
08:40 “Maximising the value of your business: tax implications’’
Holly Bedford, HMT LLP
09:00 “Enhancing operational efficiency to maximise value”
Fabrice Rodrigue, BIE Executive
09:20 Panel Q&A
10:00 Close
Maximising value, more than just about the numbers
Ian Barton, HMT LLP
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Market overviewTransactions in mid market on increase supported by improved funding appetite
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Deal volumes increased by 2% in 2014 compared to 2013 showing steady and continued confidence
Improving market sentiment generally reflected in confidence surveys of CFO’s
Election results likely to support volumes, rather than spike of Entrepreneur’s Relief now
Both corporate and institutional buyers are highly active following several years of uncertainty.
Recession has made businesses' more robust
Best deals have always got done, and more better performing businesses now
Businesses made lean during the recession now seeking inorganic growth too.
Banking market is there for transactions – although pricing is higher, appetite is strong
Alternative funders (ABL’s, HNW clubs etc) have become more prevalent
Transaction multiples have increased and vendors expectations remain within buyer’ s funding parameters.
2015 proving to be best year for some time to be disposing of businesses – just see sales being made
by PE houses – even the IPO market has been re-opened for bigger opportunities
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Successful processesPreparation, control and anticipation
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Why acquirers win auctions?
• Strategic Rationale
• Highest bidder
• Last man standing
What makes a successful process?
• Knowing what you want
• Certainty of delivery
• Control, anticipating flexibility
‘first best opportunity to sell’
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Controlling the controllableBeing prepared to manage an effective process
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Positioningfor sale
Management
succession
Data room
support
IT systemsRegulatory and
GovernanceTax review and
structuring
SPA and working
capital support
Transaction and
market
monitoring
Commercial and
strategic analysis
and review
Financial reporting
procedures and
accounting policies
KPI analysis
Historical
Financial
Analysis
Forecasts
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Migrating your business from a successful enterprise to a sellable companyExit strategies are not just about the numbers
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Scarcity/ IP
Profitability growth
Industry growth
Company Size
Low market share
Customer concentration
Recurring revenues
Scalability
Independence
Management team
V
A
L
U
E
D
E
L
I
V
E
R
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D
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What you need from your financial adviserGetting the deal done
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Expertise &
Relationships
Credibility &
Flexibility
Knowledge &
Insight
Process &
Control
“Competitive tension”
“Ability to extract value”
“One size doesn’t fit all”
“Knowing when to negotiate
and when to agree”
A great deal is worth our advice
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ContactIan is a lead advisory partner with some 20 years experience of
leading transactions and providing corporate finance advice.
Ian spent 20 years at Deloitte and for almost 10 years prior to joining
HMT built and led their South East corporate finance advisory
business as a partner. His focus is supporting UK mid market and
owner manager businesses either sourcing investment and
acquisitions or enabling exit strategies and maximising value across
a range of industry sectors.
Ian also works extensively with private equity houses and has lead
several of the region’s most prestigious transactions, winning
Thames Valley Deal of the Year in both 2007, 2011 and being
nominated every year since the awards began.
In the last 12 months Ian has advised on the MBO of Intuitive, HMT’s
first £100m+ deal being the sale of Swift Worldwide Resources to a
US private equity house, the refinancing of Southern
Communications, the MBO of seismic consultancy firm The EPI
Group, the disposal of Friarwood Ltd and the MBO of Acal Enterprise
Solutions Ltd back by NVM Private Equity, as well as winning the
2013 Blake Lapthorn Poker Tournament!
In 2014, Ian was voted ‘Corporate Finance Adviser of the Year’ at the
Thames Valley Deals Awards.
Ian is a keen sports fan – more watching than participating – and has
rekindled his enthusiasm for football in recent years being a lifelong
Manchester City fan.
Ian BartonPartner
Contact
Phone 01491 579740
Email [email protected]
Maximising the value of your business: tax implications
Holly Bedford, HMT LLP
Tax Traps and Planning on a Disposal
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What are you selling?
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Company Shares
Corporate Trade and Asset
Sales
A Subsidiary Company
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Sale of Company Shares
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10% rate of tax with Entrepreneurs Relief (ER)
Can we go home now?
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Bear Traps
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Losing ER:
Income tax rather than CGT:
28% rather than 10%
Up to 45% plus NIC
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CGT Entrepreneur’s Relief – a quick recap
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10% rate of tax on first £10m of lifetime gains
Conditions – selling shares:
EMI option holders <5%
Pitfalls
5% of voting rights and “ordinary” share capital (nominal value) for 12 months, and
employee or director for 12 months leading up to disposal, and
company has been a trading company, or holding company of a trading group, for at least a 12 month
period in last 3 years
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What am I getting?
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Immediate Cash – taxed up front
Deferred cash – taxed up front – can you fund the tax?
Cash earn-outs –a value that is taxed up front with later adjustments. ER issues
Buyer’s shares or loan notes. Automatic tax free rollover unless election made. ER
issues.
Example: Sale in Jan 2016. Tax bill on 31/1/17
Immediate Cash £500,000
Deferred cash £100,000 Paid March 17
Loan note £100,000 Redeemed June 17 and
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Shares £ 50,000
Earn out ? % of PBT above hurdle.
March 18 and 19
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Bear traps?
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Losing ER
• Do you qualify for ER at all?
• Buyer shares and loan notes –
elect to disapply
• Earn- outs, No ER on additional
amounts taxed in future
Income Tax or CGT?
• Earn outs and continued
employment
• Partial exits: Transactions in
Securities
• Employment Related
Securities. Disposal for more than
market value
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Transactions in Securities
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Very wide ranging for close companies.
Where a tax payer has a tax advantage – CGT rather than income tax.
Partial exits where the company has reserves that it could use to pay a dividend
HMRC “counteract” and tax as a dividend to the extent the company has reserves available
Advance clearance from HMRC.
Safe harbour – 25%
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Reinvesting in Buyer / MBO
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Reinvesting in Buyer / MBO
Automatic Tax-free rollovers on shares and
loan notes
Disapplying the tax free rollover for ER purposes
Employment Related Securities and S431
elections – income tax issues
Transactions in Securities – income tax issues
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Pre-sale Planning
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Pre-sale Planning
ER Spousal Transfers
ER Share Rights
ER Trading Status
Asset Extraction Pre-Sale
Subsidiary demerger. HMRC attitude?
HMRC Advance Clearances
Deal Structuring
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What you need from your tax adviserGetting the deal done
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Expertise &
Relationships
Adaptability &
Flexibility
Knowledge &
Insight
Process &
Control
“Integrated tax and CF
advice”
“Specialist tax skills and
deal experience”
“One size doesn’t fit all”
“Knowing how to deal with
HMRC”
A great deal is worth our advice
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Contact
Holly is a director and transactional tax specialist with over
20 years tax experience.
Holly qualified in 1994 with Arthur Andersen in London and
following 2 years in Corporate Tax, moved to Ernst & Young to
specialise in International Tax. She returned to Arthur Andersen in
2000 and was seconded to the USA to work in International Tax in
Chicago.
Holly returned to the UK in 2006 and joined HMT to specialise in
transactional tax. She has gained extensive experience, working
on a broad range of acquisitions, buy outs, disposals and capital
restructurings. She has also advised on the implementation of
employee share incentive schemes and a variety of personal tax
planning issues covering income tax, capital gains tax and
inheritance tax.
Holly has recently advised on several transactions including the
MBOs of Veritek Global Ltd and Jellyfish Solutions, the acquisition
of Oki-Ni Ltd by French group Meninvest SAS, the disposals
of Keltec Ltd, The History Press Inc. and Green Board Game
Company.
Holly has 4 children and 2 badly behaved dogs. When not dealing
with their demands she is a dedicated coffee drinker and is
working towards her black belt in karate.
Holly BedfordTax Director
Contact
Phone 01491 579740
Email [email protected]
Enhancing operational efficiency to maximise value
Fabrice Rodrigue, BIE Executive
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About BIE
BIE provides advisory and recruitment services for clients across a wide range of sectors,
including UK Plc’s, multinational corporations, private companies and private equity backed
businesses.
Advisory Recruitment
Solutions
Programme Initiation
Programme Turnaround
Programme Delivery
Ad-Hoc Capability Provision
Functional Expertise
Executive Leadership Team
Financial Management
Human Resources
Supply Chain & Procurement
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What Issues are you facing?
People
Processes
Technology
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How do you improve operational efficiency?
SPOT INTERVENTIONS:
Initially an experienced
resource to help define NEED
and build capability as
appropriate
When does it apply?
1. Independent business review. External
validation of current business
2. Planning and execution. Translating vision
and strategy in delivery terms
3. Cost reduction/ cost transformation. Ruthless
delivery and realisation of identified benefits
4. Efficiencies and standardisation. Specialist
skills to drive out cost and inefficiencies for
value creation
5. Integration. Realising synergies from
integrating multiple business acquisitions and
/ or infrastructure
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Efficiency programmes – intervention options
Benefits
• Experienced resources
• Cost-effective solution
• Hand-picked team
• Programme de-risking
Mobilisation and parameter
definition for transformation
programmes
External intervention for
programmes which are
off pace
External delivery capability and
subject matter expertise for
effective delivery
Capacity, bandwidth and
specific skillsets on
demand
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Benefits of intervention support
1. Additional ‘Delivery’ SME. Proven track record to bolster existing management team
skillset and capability to accelerate value creation (i.e. safe in traffic)
2. Pedigree of candidates. Exceptional breadth and range of experience from top tier
consultancy firms and industry
3. Flexibility and tailored solution. Interventions tailored to progress at the pace and
capability of the incumbent management team
4. Sustainability. Provision of tools and techniques geared to embedding continuous
improvement
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Contact Fabrice is an accomplished Programme Transformation delivery
director with 17 years experience with top tier professional services
firms such as Ernst & Young, Atos-KPMG, Chaucer Consulting and
Accenture.
Before joining BIE, Fabrice led, shaped and delivered a number of
complex large scale transformation programmes, across the whole
lifecycle (from scoping through to go live). In addition to his
background of process, technology and change, he brings additional
experience in supply chain and procurement.
He is able of offering insight and expertise to clients who are looking
for an alternative solution to consultancy-led business transformation
so that they can retain control of their project and create a lasting
legacy within their business.
He has led programmes for organisations across a wide range of
blue chip organisations and sectors such as National Grid, the MoD,
NatWest, Sainsbury's, BP, Caterpillar and Ericsson to name but a
few.
Fabrice has French and British nationality. He is a keen traveller who
enjoys discovering new countries and is also holds a black belt in
Tae Kwon Do
Fabrice RodrigueHead of Advisory Services
Contact
Phone 02034405260
Email [email protected]
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Contact
Richard KingNon-Executive Chairman
Contact
Email [email protected]
Richard was appointed to the Board in October 2014.
He spent 35 years with Ernst & Young LLP, becoming
Managing Partner of UK & Ireland and a member of both
the EMEIA Board and Global management group.
Richard is a Fellow of the Institute of Chartered
Accountants in England and Wales and works extensively
with growing businesses.
He is Chairman at Corac Group and the Grass Roots Group
Plc, Non-Executive Director of Allocate Software plc, an
advisory partner at Rockpool Investments LLP, and he is on
the advisory board of Frogmore Property Group.
He is also Chair of Trustees for the Willow Foundation, a
charitable organisation for seriously ill children and adults.
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Contact Ben has over ten years of recruitment experience across Business
Transformation programmes. He is a specialist interim management
provider with a passion for change management and has worked on
assignments with many companies from FTSE 100 to SMEs.
Ben works in partnership with organisations going through major
change. He builds a partnership with companies by understanding
their change agenda, what works well within the organisation and
culture, where there are skill shortages and knowing when people
need to be engaged on the programme.
With this detailed knowledge he creates a Flexible Talent Pool. This
group of pre-screened people ensures an efficient and effective
recruitment process tailored specifically to the needs and culture of
an organisation.
Using an interim Flexible Talent Pool ensures that you work with
people who not only get the job done, but are able to transfer
appropriate skills to your organisation. This transfer of knowledge
ensures a legacy of delivering transformation programmes.
Ben was part of the MBO team taking BIE into private ownership.
Ben HawkinsExecutive Director
Contact
Phone 02034405250
Email [email protected]
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Contact
Rob is well known in the City for his successful business
and market leadership in the ever-changing recruitment
industry.
He founded Walker Hamill in London in 1989 and built it
into an international recruitment business with an
exceptional reputation for delivery amongst blue chip
clients. Subsequently, Rob co-led the float of Imprint plc in
2001 – the first start-up recruitment company to float on
AIM.
In September 2006, he joined the Hexagon board as non-
executive Chairman, and following a management
restructure in September 2009, assumed operational
leadership of both the Cornhill Partnership, formerly
Hexagon Human Capital PLC, and BIE Executive.
In May 2013 he led the MBO taking BIE into private
ownership.
Rob WalkerCEO
Contact
Phone 02034405250
Email [email protected]
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About the presenters
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HMT LLP is one of the leading independent advisers in the UK, advising on all aspects of
corporate finance transactions as well as providing specialist audit, tax, and outsourcing
advice to support entrepreneurs build and protect value. HMT is a finalist for
‘Independent Firm of the Year – South East’ at the British Accountancy Awards 2014.
Ian Barton is a managing partner at HMT LLP with 20+ years experience of leading
transactions and providing corporate finance advice and is the Corporate Finance
Adviser of the Year at the 2014 Thames Valley Deal Awards.
Holly Bedford is a director and transactional tax specialist with over 20 years tax
experience.
www.hmtllp.com – 01491 579740
BIE provides advisory and recruitment services for clients across a wide range of
sectors, including UK Plc’s, multinational corporations, private companies and private
equity backed businesses.
Fabrice Rodrigue is an accomplished Programme Transformation delivery director with
17 years experience with top tier professional services firms such as Ernst & Young,
Atos-KPMG, Chaucer Consulting and Accenture.
www.bie-executive.com - 02034405250
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Questions and Answers
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