12 business focus


Chartered accountants Haines Watts presents a series of articles based on its blogs. It offers analysis, reviews and comments and welcomes your feedback at www.hwca.com/blog


of the month What’s your business worth? writes John Bailey, partner at Haines Watts


I’m often asked by clients what I think their business is worth and, without wishing to appear glib, the answer is always ”what someone is prepared to pay for it ”.


Accountants can and will value businesses on a theoretical basis using historical earnings and asset values but these are arithmetical calculations and should only be used as guidelines.


Maximising the value of a business will depend on being able to identify its unique selling point(s) such as location, brand, expertise, market share etc.


A pertinent example is one well- known British company which had never made a profit and had significant parts of its production


based in third-world countries. It was eventually sold for hundreds of millions of pounds and was, of course, Jaguar cars – a company with a world-famous marque.


It’s another misconception that the best time to maximise value is after a company’s most successful year of trading but this is not necessarily so.


The ideal time to get best value is actually at the start of the company’s forecast best year of trading. This will be very appealing to the potential buyer if it’s the company’s profitability that they are interested in. If they can see a good earnings record with better to come, this is more likely to increase the price they are willing to pay.


Who would be a director?


A recent report from the Economist Intelligence Unit and law firm Clifford Chance found that nearly two- thirds of all UK board members refuse to become non-executive directors due to concerns that they will be targeted by activists and on social media should anything go wrong, writes Dominic Preist of Jelf


The Daily Telegraph reported: “Industry executives are shunning lucrative non-executive directorships fearful of a new British culture of 'corporate criminalisation' as business leaders are increasingly expected to take personal liability for any malpractice”


But it’s not just non-executives or for that matter executive directors of large organisations that face exposure in this “new British culture”. All directors, officers and employees of companies can face unlimited personal liability, no matter the company’s size.


Investigation of complaints


“UK corporations have a minefield of issues to navigate as they try to protect their business against


www.businessmag.co.uk


incidents that could severely damage their reputation,” said Guy Norman, a partner at Clifford Chance.


In the Companies Act 2006 there are over 200 offences for which directors can be personally liable and exposed to direct compensation claims. There is a long list of areas where individual directors and officers are increasingly being held to account, such as:


• Bribery Act • Environmental legislation • Health & Safety regulations


• Financial reporting requirements.


Claims can come from many directions including but not limited to: employees, fellow directors, the Company itself, regulators and a myriad of enforcement agencies.


It’s important to identify the buyer who is likely to pay more than the theoretical price, because they desperately want your business for some reason.


Some years ago our corporate finance team was selling an owner-managed business where the directors had already agreed, in principle, a value of $20 million with the potential purchaser. During the negotiations it transpired that the purchaser was


prepared to raise their offer to $30 million because they saw the acquisition as being vital to their ability to turn around part of their worldwide group. Identifying that need was key to getting the price uplifted.


So, when selling a business, always take expert advice, keep cool and remember that there is more than one way to leverage a great deal.


Details: www.hwca.com


Having the resources to effectively defend yourself and your reputation is essential, the last thing you will want to do is put your life savings and home at risk.


How can you protect yourself?


The good news is that your employer is able buy insurance that will protect you and your colleagues by providing the financial means to defend yourself. They pay the bill and you receive the benefit and even better there is no P11D liability. If you are a director (shareholder or not) or a senior manager you should insist that your company provides this cover for you.


Jelf offers a combined Management Liability Protection policy with specialist insurer Hiscox that can include:


• Directors’ and Officers’ Liability – covers your personal wealth as a director from defence costs and awards made against you


• Employment Practice Liability – cover for defence costs and awards from employment claims such as sexual harassment or wrongful dismissal


• Corporate Legal Liability – cover for THE BUSINESS MAGAZINE – THAMES VALLEY – OCTOBER 2014


defence costs and awards associated with events such as alleged breaches of regulations in tax, health and safety, trading standards or corporate manslaughter.


Jelf Insurance Brokers has over 90 years’ experience helping Thames Valley-based businesses protect themselves. If you would like to find out how Jelf could help you and your business, contact Dominic Preist, details below.


Details: Dominic Preist 07595-651140 dominic.preist@jelfgroup.com www.jelfgroup.com


Jelf is a trading name of Jelf Insurance Brokers Ltd*, who are part of Jelf Group plc (Reg No. 2975376) which is registered in England and Wales at Hillside Court, Bowling Hill, Chipping Sodbury, Bristol BS37 6JX. *Authorised and regulated by the Financial Conduct Authority (FCA). Not all products and services offered are regulated by the FCA.


Source: Hiscox.


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