Jason Varney, partner in the corporate team and Poh-Leng Devare, partner in the commercial team recently spoke to South East Business Magazine about the business landscape in the South East.
- What is the landscape like for SMEs in the South East at the moment? Are there any pressing legal issues that businesses need to address?
On the whole, business is booming across the South East. Now that the Coronavirus lockdown restrictions have been lifted, we are seeing a surge in activity. From a corporate point of view, there is a huge amount of M&A activity taking place, as well as investment interest from both private equity and venture capitalists. This has been mirrored from the commercial side, with a marked increase in demand for commercial agreements.
In terms of potential issues, given the levels of activity and in particular the rapid growth we are witnessing from the SME sector, it is really important that businesses who are looking for investment or potentially preparing themselves for an exit get all their legal documentation in order. Not doing so could lead to complications down the line for SMEs (and can sometimes result in the potential investment or sale falling over)
In addition, Government support in the form of loans such as CBILs, will be coming to an end and many businesses will need to ensure they can refinance in the most cost effective way. On a similar theme, the temporary concessions that were made to allow technically insolvent companies to continue to trade have now ended. As such, any company directors still trading on an “insolvent” basis should seek advice at the earliest opportunity.
From the commercial side, clients – particularly those in the food and drinks sector – have been experiencing issues with supplies, especially in terms of shipping and storage. Due to the combination of elements such as the pandemic, Brexit and the blockage in the Suez Canal, packaging and crates in particular have been in short supply. This has led to delays and also additional costs for organisations to absorb. Businesses would be wise to be extra vigilant in terms of drawing up and checking all supplier agreements to help guard against these issues as much as possible.
Lockdown has offered many businesses the time to focus on the terms and conditions of various commercial contracts. In particular, businesses should be exploring force majeure clauses and including pandemics in these clauses going forward.
- What is your key piece of advice for SMEs?
As mentioned earlier, there is a lot of investor interest in SMEs across London and the South East. However, many investors are struggling to find businesses that are ready for investment.
Our advice for SMEs looking for investment or seeking to package their business for potential sale, is to get your affairs in order as early on in the process as possible. Investors or potential buyers will expect to see a well-managed business with all its processes and legal documentation in order.
In fact, this advice rings true even for those SMEs not looking for investment. As businesses grow, it is all too easy for processes and documentation to become unwieldy. For example, some growing SMEs may find they have multiple sets of terms and conditions. As they mature from the ‘S’ to the ‘M’ in SME, it is really important that organisations streamline and standardise their processes, including their commercial contracts and terms and conditions.
- What legal support do you offer SMEs in the South East?
Our Corporate and Commercial team offers expert support at all stages of the commercial life-cycle.
This includes incorporations, M&A and disposals, private equity and venture capital, joint ventures, share buybacks, demergers, group reorganisations, management buy-outs / buy-ins, share option schemes, EOTs, succession and exit planning, banking and finance transactions, and general corporate advisory work.
Similarly, our expert commercial lawyers can help with all contractual, commercial and trading issues, from the initial structuring, drafting and negotiation of contracts to advising on termination issues.
Our Corporate and Commercial department is supported by experienced and dedicated Commercial Property, Employment and Dispute Resolution teams.
We are experienced in acting for private limited companies, Owner Managed Businesses, UK operations of foreign multinationals and Entrepreneurs and Investors.
In particular, we have notable sector expertise in relation to food and beverage, automotive, technology industries.
We also have a hugely well respected Private Client team, which works hand in hand with our Corporate and Commercial departments to support business owners and high net worth individuals with estate and tax planning as well as family issues.
- Is there anything else you’d like to highlight?
While it is really encouraging to see such high levels of activity and growth in the South East SME landscape, we would urge all businesses to ensure that they take appropriate legal and financial advice as early as possible.
This applies to all types of business transaction, from entering into new sales relationships with customers and suppliers to seeking investment to planning exit strategies.
Getting the right advice early and getting all relevant documentation and processes in place doesn’t just help all kinds of commercial relationship run more smoothly, it can also massively impact on a business’ bottom line, which in turn will affect any growth and investment plans.
A selection of these comments were originally included in South East Business Magazine.