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finance


A spotlight on e-fulfilment Background


While 2018 has been another tough year for high-street retail, changing consumer shopping preferences continues to drive retailers to reinvent themselves. The internet has given consumers the convenience and flexibility of shopping from the comfort of their own homes, thus resulting in delivery channels being faced with the challenge of coping with this rapid shift. It has also opened up a new world of choice and price comparison that has not traditionally been available.


So, what does this mean for e-fulfilment?


Research by The Ecommerce Foundation indicates that speed and accuracy of delivery ranks highly in end-consumer expectations making them top priorities for successful e-commerce businesses.


Resulting in the need for more warehouse space to accommodate the growing demand, as well as better technology to ensure accurate, safe and efficient delivery, e-fulfilment businesses and third-party logistics operators (who previously only


dealt with the demands of just final mile delivery on behalf of high street retailers) are now an integral part of the customer shopping experience. Unsurprisingly, this shift has meant that many e-fulfilment businesses find themselves either: requiring capital for expansion, seeking investment in infrastructure, or looking to exit as the business grows beyond their existing resources.


Some of our recent successes


Having successfully completed a range of deals in this sector during 2018, the corporate finance team at Quantuma are in an optimal position to help you understand the market and achieve your ambitions. We can work with you to identify acquisition targets, support you in raising funds, or help you if you are looking to exit and maximise your returns.


If you are an ambitious, entrepreneurial business looking to carry out any of the above in this or an ancillary sector, we would be delighted to share our expertise and experiences with you.


Working with PE houses


At Crowe, our approach to working with private equity (PE)-backed businesses is straightforward


Everything we do is focused on assisting clients to achieve ambitions for their businesses, as well as maximising value for all stakeholders on exit. Our locally-based partner team of Bob Alsop (corporate finance), Jane Mackay (tax) and Christine Dobson (audit) bring a valuable blend of experience of working with fast-growing businesses, particularly in the PE sector. This ensures our clients receive relevant and timely advice supporting them as they grow, with the objective of ensuring they are ‘deal ready’ whenever the exit arises.


In our experience, PE-backed businesses should consider, among other things, seven areas to improve business performance.


Management equity incentives


Introduce management equity incentives, which can work well for PE-backed businesses, if there is an exit/realisation event anticipated. Keep it simple, only involve those in equity you believe will create value, otherwise you risk spending time managing the share scheme rather than the business.


PE corporate structure Take time to make sure that the PE structure


THE BUSINESS MAGAZINE – JANUARY/FEBRUARY 2019


is operating as expected when put in place. If you used a Topco/Midco/Bidco structure, are all the companies actually carrying on the function intended, or did the financing change at the last minute? Consider tidying up or eliminating any companies that are not required in the structure.


Tax compliance


When taking decisions about payroll, VAT and corporation tax compliance management, consider what someone doing due diligence on the company might think. Balance tax saving with tax risk and keep up to date with all tax filing and payments. Businesses do not want their tax compliance to become a future price chip issue. Getting it right can save money, while getting it wrong can be very costly.


Exit readiness


Consider and assess the exit-readiness of the business at least once a year. Businesses should review this in terms of quality of management information and the overall control environment. This should include IT, finance resources and experience, implementing efficient back-office processes and ensuring the availability of up-to-date


Ian Barton 07881 816001


ian.barton@quantuma.com quantuma.com


writes Ian Barton, partner, corporate finance


business plans, forecasts and cashflows, to maximise the multiple and ensure a smooth exit process.


Review recommendations


Continually review on-going accounting recommendations from the audit process to drive value. Reviewing and agreeing the balance of judgements and estimates prior to the year-end will assist in maximising earnings before interest, tax, depreciation and amortisation, (EBITDA) and avoid a future price reduction from a due diligence process.


Focus on value


Make smart decisions early where bolt-on acquisitions are being considered. Focus on the key value drivers for the deal, so as not to waste time and resources that could be used more effectively elsewhere.


Specialist advice


Consider seeking specialist business advice where necessary to help reach growth potential.


At Crowe, we work closely with our clients, offering commitment and accessibility to ensure clear and on-going communications. Together we work to ensure that our clients can make smart decisions that provide lasting value.


crowe.co.uk


businessmag.co.uk


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