24 corporate finance
How to protect your business from
As the country emerges from recession and businesses start to increase activity, it’s more important than ever to manage your cashflow. Depending on the circumstances, you may have only a short time to raise funds before creditors begin proceedings, suppliers withdraw, or investors panic.
Almost 90% of small business failures are the result of poor cash management. There are several ways you can help avoid your business ending up like them.
Plan ahead
The key to avoiding a crisis is a realistic cashflow forecast.
Factor in unexpected events. What would happen if a major customer defaulted on a payment or a supplier unexpectedly introduced a substantial price hike?
Refer to your plan regularly to make sure your finances stay on track.
Money up front
Most businesses that trade via the Internet receive payment up front, removing the risk of late payment or default. Some companies can implement this with offline trade.
Even if it is not possible to require full payment in advance, you might consider asking for part payment. And with extended orders or prolonged projects, it makes sense to have a staged payment plan agreed in advance.
Allow regularity and predictability
You might consider:
• Negotiating a regular payment plan with your main suppliers
• Encouraging certain customers or clients to pay in regular instalments according to an agreed schedule
• Asking intermittent clients to move to a regular retainer basis
www.businessmag.co.uk
Poison pills to avoid when selling your business
a cashflow crisis One day your business could be running smoothly, and the next it could be in danger of failure because there is not enough cash to pay your suppliers, the payroll or HMRC, writes Alan Williams of HWB
• Leasing rather than buying certain assets
• Streamlining stock to avoid tying up cash.
Make it easy for customers to pay
Many businesses already use credit card machines to take payments but an increasing number of small businesses are now able to take online payments with services provided by companies such as PayPal.
Cashflow basics
• Raise invoices at the earliest opportunity
• Make credit terms clear on both orders and invoices
• Enforce late payment penalties consistently
• Consider offering early payment incentives
• Pay your own bills on the deadline, not before.
We’re here to help
A commitment to helping our clients protect and grow their business is at the very heart of HWB’s ethos. We would be delighted to help you review your cashflow situation and devise more effective cash management strategies.
HWB Chartered Accountants, based in Chandlers Ford, Hampshire, is one of the largest independent accountancy firms in the south and offers a range of services including corporate finance, business and tax planning advice.
Details: Alan Williams 023-8046-1201
www.hwb-accountants.com
M&A activity in the south is growing rapidly, says Jonathon Roy, partner at Paris Smith. Since the beginning of 2013, the firm’s corporate department has advised on transactions worth more than £350 million. Despite this, however, deals remain vulnerable
Although corporate and private equity buyers are becoming much more active, there remains a level of risk aversion which can cause deals to be seriously disrupted if the business operations of a target company are insufficiently robust to withstand a detailed due diligence review.
We have listed below some issues which have arisen during buyers’ analyses and which have either caused a deal to be aborted or resulted in an increased escrow or price cut at the expense of the sellers.
1. Deficient intellectual property arrangements. This has been a key issue on a number of transactions, including failure to ensure that (a) a former (and now disaffected) contractor to the target had adequately assigned all IP created by it which was fundamental to a new patent underpinning the entire new product range of the target, (b) a key contractor developing software for the target, and its subcontractor, either licensed or assigned ownership of the software to the target, (c) intellectual property created by the target for its customers was retained and (d) the terms on which the target had shared ownership of IP with a third party were properly documented.
2. A target which had granted territories to its distributors or agents on an exclusive basis, which was required by a large corporate purchaser to terminate those arrangements in order to allow
the purchaser to sell its own products alongside the target’s product range within the purchaser’s existing distribution arrangements.
3. A target which had previously sold its business in the US under the terms of an agreement which prohibited the target and its affiliates (which arguably included any future purchaser) from doing business in the US.
4. A target which had amended key contracts (without legal advice) with the intention of making them terminable by the target in the event of a change of control, but which actually made them terminable by the third party.
5. A substantial buy-back of shares by a target before completion which had not complied with the Companies Act and which was therefore potentially void.
6. A target which had undertaken intra-group asset transfers within three years and was therefore subject to a substantial tax clawback on leaving its group.
To discuss the legal aspects of preparing your business for sale, or for general M&A advice, contact Paris Smith as below.
Details:
Jonathon Roy – 023-8048-2301
jonathon.roy@
parissmith.co.uk
Michael Moore
michael.moore@
parissmith.co.uk
Richard Atcherley
richard.atcherley@
parissmith.co.uk
www.parissmith.co.uk
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – JUNE 2014
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36