Thomson Snell & Passmore hosted a seminar for over 35 attendees discussing acquisitions, growth and exit strategies for businesses and business owners.
Joanne Gallagher, Head of Corporate & Commercial at Thomson Snell & Passmore led the seminar, with guest speakers Laura Cockburn from BGF and Nigel Kimber from McBrides Chartered Accountants.
Many of the businesses that attended anticipated making acquisitions or raising growth capital in the foreseeable future, but there was still a degree of uncertainty around future business plans, and particularly around how owners would exit their businesses.
Joanne Gallagher - Thomson Snell & Passmore
Joanne Gallagher focused on acquisitions, explaining the key stages and considerations in making an acquisition. Joanne also discussed some of the possible pitfalls and how to ensure that businesses can flourish once they have been acquired by another business.
Attendees were positive about acquisitions: 61% said their businesses had made an acquisition in the past, and almost half were planning on doing so in the future (42%). Only 4% said they would not consider making an acquisition. The results show that confidence remains reasonably strong despite significant uncertainties facing businesses.
Laura Cockburn - BGF
Laura Cockburn discussed the role of equity capital, particularly for small and medium sized businesses. Funding options for SMEs have grown substantially with the emergence of alternative funders, including the expansion in venture capital funding and the rise of crowdfunding. Traditional bank lending has also become more accessible as banks have moved into positive year on year lending growth for the first time since the end of 2015. 33% of the attendees said they are planning to raise capital growth within the next 12 months.
BGF offers businesses long-term, patient capital without forced exits. They look for companies with strong management teams, and only ever take minority stakes in the businesses they back, which allows the existing leadership to build upon their successes. BGF’s minority, long-term approach differs from traditional private equity investments and ensures that founders or management teams maintain control.
Nigel Kimber - McBrides
Nigel Kimber, spoke on the options and structures for exiting a business and returning value from the business back to its owners. The economic outlook for owners looking to exit is good, as many larger businesses have built up significant cash reserves and are actively looking for targets to acquire. This, together with attractive tax rates, puts business owners in a strong position.
Of the attendees surveyed, 46% anticipated a change in ownership in the next ten years, of whom 40% anticipated a change in the next three years. The majority expected trade buyers or existing management to buy out the business (62%). Interestingly, none of those attending expected a family member to buy out the business – a stark change from historical trends where small and medium sized businesses often stayed in families for generations. Nigel noted that in his experience this was largely due to younger generations wanting to take a different route from their parents, rather than staying with the family business.
Commenting on the event, Joanne Gallagher, Partner and Head of Corporate & Commercial at Thomson Snell & Passmore said:
“Our aim in hosting this event was to provide our clients, contacts and referrers with an engaging seminar to discuss key issues to consider in relation to acquisitions, growth and exit strategies. It is important for business owners to consider the three topics together in the lifecycle of their businesses. We are delighted with the feedback we have received following the event, and are pleased that the attendees were able to benefit from the expertise of each of the speakers on their respective areas. I would like to thank Nigel and Laura for their valued input, and for all of our guests that attended.”
Laura Cockburn, Direct Origination at BGF said:
“There are many ways a company can seek funding for growth. Our capital really suits entrepreneurs who want to continue to grow their business whilst perhaps taking some money off the table. We exist to help companies build scale, without taking control. We support and challenge them without driving them too hard and too fast.”
Nigel Kimber, Corporate Finance Partner at McBrides said:
“Anyone anticipating change in the ownership of their business needs a good three years of careful planning to get their business in the best shape possible, whether they are looking to achieve a management buy-out, a sale to trade or handing it on to a family member. It takes hard work and determination to grow a strong business, so taking the time to ensure you plan the best exit is just as important.”