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Ref: CDZSP1001001

T/O: £1.7m

EBIT: £250k

Sector: Portable Gas Supplies

Based: North of England

Description: Full range of bottled gas, camping gas and ancillary products. Customers include domestic, commercial, public sector and agricultural users, caravan parks, other stockists, restaurants, pubs and clubs

Ref: CDZSP1001005

T/O: £5m

EBIT: £800k

Sector: Capital Equipment Hire and Materials Handling

Based: North of England

Description: Sale, lease, servicing and maintenance of forklifts and construction equipment, plus successful operations in warehousing/access. Opportunity to extend its dealership area with a major manufacturer to other parts of the UK

Ref: CDZHB1009209

T/O: £3.6m

EBIT: £200k

Sector: Construction Equipment

Based: South East England

Description: Construction Equipment sales, parts and servicing as well as distributor rights. The product range includes loaders, excavators, telescopic handlers.

Ref: CDZSA1001002

T/O: c. £10m

EBIT: c. £1m

Sector: Pawnbroking

Based: UK

Description: CEO-level individual sought for an MBI lead by a specialist Private Equity house in the retail/consumer space.  Fully funded deal missing management skill-set.  Previous experience in the sector required.

Please contact us for information on other available deals.

I’m a sports lover, and at around this time of year I get particularly obsessed with two games in particular.  Firstly, football.  Or more specifically, the league run-in of my beloved West Ham United as we desperately try to hang on to survival through any means possible.  And secondly, economics.  Or more specifically, the budget, as we desperately try to hang on to survival through any means possible.

Now, I am perfectly prepared to accept that there has always been debate as to whether Economics is an art or a science, but there is not a great deal of support for the case that it’s a sport.  But whether I’m watching the mighty Hammers from the Chicken Run at the Boleyn Ground, or the budget from my office television, consider the parallels:

Firstly, both take place within a cauldron of partisan supporters from opposing sides.  Secondly, the bloke in the suit who takes ultimate responsibility for the result has a lot less control over proceedings than they might want you to think.  Thirdly, there is a lot of jeering.  Fourthly, an under pressure manager is always happy to deflect short term criticism with the phrase ‘judge me on my future results’ until such a point where said future results also start to look unfavourable, where a change of tack is required.  And finally, both ‘sports’ are subject to infinite post-match micro analysis.  Which is fortunate, for the purposes of this article. 

So with that in mind, what punditry can be offered on last week’s top flight budget bout for those of us concerned with deal-doing?

Probably the most significant development barely made the mainstream bullet-point summaries what with the fuss over headline-grabbing petrol price party tricks.  You could be forgiven for missing the fact that Entrepreneur’s Relief is going up to £10m.  This is undoubtedly good news for those trying to do deals with owner-managed businesses, as it’ll give owner-managers a tax incentive to sell, which will hopefully go some way to off-setting the recalcitrance some private buyers have detected amongst sellers over the last couple of years.  It’s not going to solve the issues of shareholder reluctance on its own, but it may help make the case that hanging on regardless is not always in the business’ best interests.

The drop in Corporate Tax is also a welcome development.  In the early years post-deal, the more headroom that can be created in cashflow the better, which might sound like a statement of the bleedin’ obvious, but if there’s a debt element to a transaction, one can’t underestimate the implications for cashflow, and anything which creates the room for early pay-back has to be seen as a major boost.

We wait to asses the implications that the new Enterprise Zones may have.  But conceptually, this might provide an opportunity for consolidating purchasers or buy-and-builders looking to establish a group from a fresh location.  Results were inconclusive either way the last time this idea was tested, so we must hope that the administration has learned from what went wrong last time, and kept the stuff that was perceived to work.

The bank levy remains an interesting dichotomy.  The government finds itself in an awkward position.  Even without it’s natural affinity with the city (which only complicates matters), it would face a substantial carrot vs stick ratio quandary, tasked with somehow stumbling on the magic formula to encourage the ideal combination of prudence and functional activity.  Bank-bashing is always going to go down well with the public, but that alone is highly unlikely to get the lenders playing ball in terms of what the government wants to see.  Osborne must feel like he’s trying to housetrain a particularly petulant leopard, and I’m not sure too many neutral observers would bet against the leopard in the short term.  So it’s probably best for us to assume the banks will do as they please for the time being, and will re-enter the fray on a meaningful level at an unspecified point in the future of their choosing.  In the meantime, it’s probably worth looking to alternatives where at all possible.

Which leads us to the broader matter of the state of the nation’s financial health in general. Whatever one’s personal views on the strategy to be employed, it appears that the government is struggling to get the country growing again, and that looks unlikely to change in the near term.  This was a largely uncontroversial and not unhelpful budget, at least from the perspective of a deal-doer.  But as the impact of the cuts starts to be felt this year, challenging times almost certainly lie ahead.

Much has been made about the responsibilities of the private sector to pick up the slack from an over-reliance on the public sector and get the wheels in motion again.  But such are the realities of interconnected business these days, that it’s not a black and white division between public and private.  Many private businesses will have had contracts riding on projects like Building Schools For The Future, and regardless of whether one feels the cuts are a necessary evil or otherwise, it is difficult to imagine a scenario where these do not impact the private sector as well.

So for the sake of topping and tailing the analogy neatly, let’s speculate that we’ve reached half time in this particular recession.  We’ve taken a bit of a battering in the first half, the team strategy looks like it might not have worked-out as planned, and there’s nothing to suggest that the second half is going to be any easier.  But I like the look of the gaffer’s half-time  substitutions.  I just hope he’s got his formation and tactics right.  Let’s hope for a game of two halves.

The transactional process can be complex, especially if it’s not something you’ve encountered before as a private individual.  It is therefore crucial you get the right advice from the start, and it is your corporate finance adviser’s role to carefully manage and guide you through the process and to ultimately deliver the end result. With this in mind, it is vital that you are able to establish a sound relationship with your advisor built on trust.

An indication of an adviser’s ability to deliver can be gleaned from their track record, ask for references and examples of similar work. Your initial meeting is likely to be with a senior representative with whom you may get on well and trust in their ability. However, it is likely that some proportion of the work is going to be delegated to more junior staff members. Feel free to ask to meet the team.

You want your project to be important to your adviser so ask how many other transactions they are dealing with at present as this will give you an indication of how much time will be devoted to your project. Remember, you could be spending long hours with them, therefore, ensure you’re going to get along.

Fees should be an upfront question. There may be a fixed fee or a contingent/success fee or it may be a combination of both. A good adviser will structure it so that you understand it and are comfortable with it. It should always incentivise them to work hard for you.

Your adviser’s experience and ability will enable them to arrive at a justifiable value for your target business and, via thorough due diligence, determine it is worth what you think it’s worth and if not why not.

It is a combination of all the above and trusting your adviser to act as the buffer between you and the vendors, identifying obstacles early on and negotiating hard to buy a business for you that will result in the right acquisition for the right reasons and for the right price.