Steve also points to the match-funding that may be available and the work of the Northern Powerhouse Investment Fund (NPIF). He adds: “The aim is to put together a deal that enables early-stage businesses to leap forward and advance.”
Expert View
MANY HAPPY RETURNS by Stephen Gregson
corporate finance director, MHA Moore and Smalley
What are PE investors looking for? In a word: ‘returns’. Typically, PE investors are looking to at least double the value of their investment within three to five years.
Damian Mohammed
However, there are still Lancashire businesses out there that aren’t aware of what is available. Steve says there is a need to nurture the entrepreneurial mentality and adds: “We need to get people thinking, not just about doing the work but growing.”
He adds: “We can help businesses understand their opportunity. People think they have got to come in with a ‘Dragons’ Den’ idea, throw it in front of somebody and get funding. It doesn’t work like that.”
Business angels are starting to do more deals in Lancashire, Steve says: “They’re looking for people with the fire in the belly they once had. They put in a significant amount of money to work with the entrepreneur. But you’re not only getting cash, you are getting knowledge.”
The chemistry between the two must work. Steve says: “Get it right and the business can really go into the stratosphere.”
Alex Rothwell is senior investment manager Maven Capital Partners. The private equity house specialises in SME funding options. It also manages the North West equity finance element of the NPIF.
He believes education is the key to helping more businesses unlock the benefits of private equity.
And he adds: “We are constantly looking to talk with businesses to show how equity investment can work for a variety of different businesses. The unifying factor is they are businesses looking for growth.”
Alex says the NPIF can benefit business that are beyond the ideas stage but “are far from the finished article in terms of where they want to be.”
Not all businesses are in sectors where such high levels of growth and scale up are possible; and not all businesses in those sectors have the management teams who are able to deliver that growth.
It is a truism that PE investors don’t back businesses, they back management teams. The investor must believe in the management team’s ‘strategic growth story’ and must believe that they are able to deliver it.
Having a clear three to five year strategic growth focus is key, as is a management team which is credible and has few if any skills or experience gaps.
A clear, persuasive business plan is a must. It is the way that the team sets out its clarity of:
Speed of growth is central, with PE a good fit for businesses looking to exploit new markets and sectors. However, Alex says it doesn’t work well with established businesses looking at organic growth.
“Private equity doesn’t fit naturally with businesses looking to grow 10 per cent each year through doing more of the same,” he adds.
He says: “People shouldn’t look at PE as giving away part of the business. It is investing part of the business so significant amounts of money can be used for growth.
“It only works if everyone, investors, shareholders and managers, are striving for the same thing and pushing in the same direction. They come together to take the business forward. Ultimately if it doesn’t grow everyone loses out.”
Following a £750,000 investment from the Maven-managed NPIF Skelmersdale-based
1. Understanding of the market opportunities open to it
2. The strategies they will adopt to take advantage of these
3. The investment needed from the PE funder to carry out those strategies
4. The financial impact that investment will have on the value of the business over three to five years
PE investors provide money - but the best investor for you will bring more than that. They must have a cultural fit with your business because there will be testing times ahead and when those come, it is cultural capital as opposed to financial capital that is often the determinant as to whether the challenges can be confronted and overcome by the business - or whether it will succumb to them.
Extreme Low Energy (ELE) increased revenues by 220 per cent.
The firm manufactures carbon-saving alternatives to traditional power supplies and its products can be found in the UK and African education sectors, as well as offices, warehouses and social housing markets.
The firm received six-figure funding in 2018 which was used to expand its workforce, technology and product development capabilities.
Mark Buchanan, founder and chief executive, says: “I am extremely proud of what we have managed to achieve in recent months, especially considering the wider market conditions, with exponential growth in terms of product development and our team.
“Investment has enabled us to bring our new product to market three to six months sooner than planned, allowing us to serve a demand which continues to grow.”
LANCASHIREBUSINESSVIEW.CO.UK
47
FUNDING
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 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80
