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CENTRAL SOUTH MID MARKET CONFIDENTINNOVATIVE


Putting the mighty in the middle


When we launched our Central South Mid Market campaign a year ago we at BDO had a fairly good idea of what it would reveal: that the mid-market is a true asset to this region. Yet even we were a little surprised by how much the Central South mid-market punches above its weight


Medium-sized businesses have proved resilient during some of the toughest times the global economy has known. This market segment is home to some of the UK‘s most impressive companies, which are exporting, innovating and staying a step ahead of the market as they execute their ambitious growth plans.


Over the past 12 months we have identified the Central South‘s leading, privately-owned, mid- market companies within the £10-300 million turnover bracket that are growing overseas sales, achieving sustainable profit growth and demonstrating the importance of investment and innovation. We have held a number of different events across the whole region in order to engage with them on these topics and hear first-hand the opportunities they have and the issues they face.


We work with these businesses every day. We know that their challenges are different from those encountered by smaller companies or larger corporates. This means that they also have distinctive needs, and require targeted support and legislation to help them flourish. In response, as a firm in the autumn of 2014, BDO launched its Mid-Market Manifesto which included a range of ideas and policy recommendations that we put forward to the political parties as they considered their plans for economic growth in the run up to the General Election.


We have also brought together other professionals, banks and business organisations in the Central South to discuss our findings, what we have heard from the companies we have talked to and to consider how, together, we can better support their growth and sustainability ambitions.


Going global


An encouraging number of the region‘s mid-market businesses are looking at international markets for expansion, however the majority are still targeting established markets such as Northern America and Western Europe.


www.businessmag.co.uk


Arbinder Chatwal, director BDO, discusses the challenges of going global with Adam Oliver, Field International, at a discussion dinner held in Bournemouth


We believe local mid-market businesses need help to understand their potential for international success. They need hands-on support to map out the international journey and, importantly, must have access to the right advice and funding to implement their plans. The majority of businesses we met were still not aware of the support UKTI can provide, and furthermore there was confusion with the number of trade bodies in the region and exactly where business should go for this support.


Culture and language was cited by a number of businesses as a key challenge when entering new markets. This was seen as one of the reasons why a number were looking at Northern America and Western European rather than looking at the emerging markets for growth.


Those that have existing international operations cited finding the right partner – be that a distributor or supply chain partner – as a real practical challenge. Existing exporters cited regulatory legislation as a barrier when investigating new markets. Getting the right advice when entering into new contracts abroad is key to ensuring you can both


repatriate profits back to the UK successfully and structure any intra-group charging while maintaining an appropriate overall group effective tax rate.


We would really encourage companies to not be daunted by the challenges but get the right advice and take advantage of the opportunities the emerging markets have to offer.


Going for growth


One key feature of the year‘s mid-market activity is the resurgence of the M&A market.


As business confidence continued to rise, so too did the optimism of management teams looking to increase market share through strategic mergers and acquisitions.


Ironically, part of that optimism has come about because of the recession. Management teams were forced to understand their business better; to truly recognise their core strengths and costs, seek professional advice and realign their operations and objectives.


Playing an important part in the level of deal activity is funding. Following many years of restricted access to finance, there are now far more opportunities to gain financial support for companies with robust growth strategies. The banking environment, private-equity funders and the stock markets – both AIM and the main market – are well and truly open for business.


In 2014 we witnessed consistent growth returning to the UK economy, and this has been supported by a variety of funding options and judicious use of existing resources.


There has been an improving funding landscape in both debt and equity markets. However, the most appropriate funding route for an individual business may have changed for good post-recession and therefore careful navigation of the options available has never been more important.


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – MARCH 2015


GROWTH


ENGINE


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