contact us on +44 (0)20 7318 5700 corporate finance 21


H.I.G. Europe is the European arm of H.I.G. Capital, a leading global private equity investment firm. We specialise in providing capital (typically from £5m up to £75m) to small and medium-sized companies with attractive growth potential. We also have extensive experience with financial restructurings and operational turnarounds.


For further information please visit www.higeurope.comor contact us on +44 (0)20 7318 5700


More opportunity for successful exit planning


Andrew Killick, head of corporate finance for Baker Tilly in the south reviews some of the recent changes in market trends for business owners looking at short term exit plans


In the past three years many owner- managers have held on to their business and traded through the turbulent times. However, none of them have become younger, few healthier, and with greater tax reliefs now in place, more owners are now looking to exit from their business and retire.


Short-term valuations may continue to improve, but this will still require there to be sufficient buyers with access to appropriate finance to complete the transactions. It is likely to remain a buyer’s market for some time and prospective sellers should spend sufficient time ensuring that their business is suitably attractive to relevant buyers.


Over the past six months, we have seen various changes in market trends, including:


• An increase in overseas investors/buyers; especially from Scandinavia;


• More buyers attempting to reduce the value of the deal in the latter stages of the process;


• The apparent low volume of debt-led deals resulting in increased venture capitalist representation in transactions or increased vendor loans.


Each of these factors may affect the likelihood of sale and the valuation that can be achieved. By using advisers who


understand the mechanisms of dealing with overseas purchasers, particularly where they work in conjunction with an international network, business owners will be reassured that there is less likely to be last-minute surprises such as price chipping or funding issues.


Overseas investors – everybody likes an apparent bargain and the exchange rate differences compared to a few years ago still makes the cost of a sterling based acquisition ‘cheaper’ than it would have been. Overseas opportunities should be explored, but the downside risk of differences in culture and transaction practice should not be underestimated as a significant amount of time can be wasted on potential transactions that do not complete.


Value reduction – a reduction in the price has always been a risk until the deal completes. However, it is even more essential today to minimise the opportunities that a buyer has to reduce the value. This may be achieved through the use of vendor due diligence, running a tight auction process in terms of having several parties interested and keeping to a pragmatic (but short) timetable.


Funding – with the demise of debt-led deals, the price sought might only be achieved with venture capital or vendor


Asset Management by Angus Thomas Photography


www.angusthomascorporate.com for lit corporate and environmental portraits


THE BUSINESS MAGAZINE – THAMES VALLEY – JUNE 2011 www.businessmag.co.uk


support. Owners should look at their business from the perspective of what would be attractive to equity investors – a business with significant growth potential or a planned roll-out will be far more attractive than one that ticks along and only able to service debt.


Whatever the state of the market, those that plan ahead and position their business as being attractive to potential buyers will have the greatest chance of achieving their aspirations.


Details: Andrew Killick 07771-945513 andrew.killick@bakertilly.co.uk www.bakertilly.co.uk


H.I.G. Europe is the European arm of H.I.G. Capital, a leading global private equity investment firm. We specialise in providing capital (typically from £5m up to £75m) to small and medium-sized companies with attractive growth potential. We also have extensive experience with financial restructurings and operational turnarounds.


For further information please visit www.higeurope.com or contact us on +44 (0)20 7318 5700


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