If Scotland was a
Much has been writen and talked about lately as to how Scotland could shape up and run its own affairs. If the nation was business, how would Scotland fare as a Management Buy Out?
Ivan McKee, an international businessman with more than 30 year experience looks at how best Scotland, as a division of UK plc, could go about maximising the value it could deliver to its shareholder citizens?
A
MANAGEMENT Buy Out (MBO) is the process whereby the management team of a business (oſten a division of a large corporation) buys the business from its corporate owners. It’s a fairly common process which oſten results in a new lease of life and a bright future for the business in question. MBOs have the highest success rate of any business restructuring process.
Firstly, a strong revenue stream is important in any business and Scotland enjoys higher tax revenues and a higher GDP per head than the UK average. This has been the case as far back as records go, demonstrating robust, and sustainable, economic fundamentals.
Scotland’s notional spending under current arrangements includes many ‘central’ (or ‘head- office’) costs which are ‘allocated’ across the UK – although a high proportion of that spending doesn’t actually take place in Scotland. One example is defence - where only around 60 per cent of the notional £3.3bn considered to be spent ‘on’ Scotland’s behalf is actually spent ‘in’ Scotland.
Anyone who has been responsible for running a division of a large corporation understands the questionable value of head office cost allocations.
Scotland’s £50M share of the cost of Westminster MPs (and their expenses) is another. The opportunity to remove such an unnecessary and expensive layer
business… by Ivan McKee
of bureaucracy should excite anyone familiar with LEAN manufacturing concepts.
Would Scotland be big enough to survive in an ‘open market’ ? With a GDP of around £150bn Scotland sits in the top quartile of countries globally, so it is no economic lightweight.
When compared to similar, and very successful, ‘businesses’ in the same market the evidence shows smaller entities tend to do beter.
Of the 20 richest countries in the world almost all have populations smaller than, or similar to, Scotland. It should come as no surprise that Norway, Denmark, Switzerland, Sweden, Singapore, Austria and Finland, among others, do well.
In the 21st century, economies -
like companies - are rewarded for being flexible, responsive and for having the ability to spot and rapidly exploit opportunities.
Smaller businesses can suffer from June 2015 59
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