Expert View WHEN IT’S TIME
TO MOVE ON by Nick Hodgson
Corporate partner, Forbes
You’ve spent your life building your business but what happens when it’s time to move on?
Most entrepreneurs don’t contemplate the end, but endings are as sure as beginnings and planning your exit well in advance can ensure the story ends the way you want it to, for you and your business. Here are some of the exit options available:
Trade Sale: It is possible to make your exit by way of a sale of your business to a third party. This can be by way of a sale of the shares in the company or following a sale of its business and assets.
This method is most suitable to owners that wish to exit but, at the same time, create an opportunity for a larger merged group to move forward with the benefits that can bring.
Management Buy Out (MBO): If the business has an effective management team in place, a purchase of the company by that team can provide an alternative to a trade sale. It can provide a smooth transition of power with little disruption as the new owners will have become familiar with its operations, customers and suppliers prior to the buyout.
This can sometimes provide a company
team, robust growth plans and a loyal customer base.
“We’re well-positioned to seize further growth opportunities that focus on the highest quality logistical solutions for our customers, whilst enabling us to retain the strength of our existing processes and management team.”
Burnley-based EFS Global has been undertaking its buy to build strategy for some time now. Earlier this year it was predicted that the business would hit the £100m turnover mark, following two more acquisitions.
The deals, for undisclosed sums, saw the logistics firm acquire the entire issued share capitals of Gees Haulage of Wakefield and Tyneside Express Transport of Gateshead. The aim of the move is to add value and reach.
Both companies provide a comprehensive range of haulage, distribution and warehousing services and the acquisitions have delivered 235 vehicles and 115,000 sq ft of warehousing space to the group.
Announcing the deals Mark Jones, managing director of EFS Global, described 2021 a period of “substantial growth” for the business and added that the latest acquisitions “mark significant steps in our ongoing growth
with the impetus to move to the next stage in its development under new ownership.
Private Equity (PE) Investment: Your exit could be affected by the introduction of a private equity fund as an investor. PE can breathe new life and introduce considerable experience into the business.
However, understandably, PE investors will insist on taking an extremely hands on approach, exercising a controlling influence on decisions.
Flotation: You could float the business, placing the shares in the company on the stock market. The two main markets are London Stock Exchange and the Alternative Investment Market (AIM).
AIM is frequently the preferred exchange for newer and smaller companies due to its more straightforward and accessible procedures. Nevertheless, there is extra regulation and red tape. There may also be internal restructuring steps required.
Liquidate and close: A final and last resort would be to go through a solvent winding up of the company. The assets would be realised, and creditors paid off, with the surplus distributed to shareholders. The main negative is that employees would lose their jobs and there can be a knock- on reputational impact.
strategy and will enhance our ability to service our clients around the country.”
It’s not just logistics businesses looking to expand their horizons through buy to build strategies. Blackpool-based Fox Group has continued its expansion journey with a deal that takes its haulage, earthwork and plant hire specialist operation nationwide.
It has completed the multi-million-pound acquisition of Cotswold Roller Hire (CRH), a major force in the hire of specialist compaction equipment across England and Wales.
Another step in the delivery of its strategic plan, the move strengthens Fox Group’s market position, with the addition of CRH’s extensive portfolio of plant, machinery, market knowledge and depots across the country.
Fox Group now operates from 18 locations, has a 270-wagon fleet, 1,800 items of plant and machinery and employs 620 people.
Chief executive Paul Fox says: “The acquisition of CRH adds a large number of plant items and specialised transport to our already substantial fleet of plant, tippers and bulk haulage.
“The geographical spread of CRH’s depot extends the reach of Fox Group, hugely increasing our footprint across the UK.”
LANCASHIREBUSINESSVIEW.CO.UK
Steve Bell Corporate finance director
@pcaltd pierce-c.-a.-limited @PierceCA
THE EXIT STRATEGY
At a point when many business owners are now considering a sale of their companies, our experience at Pierce Corporate Finance shows that real value can be driven through the transaction if the shareholders adopt a strategic plan for the sale.
Rather than the process starting when you put the business on the market, shareholders should take specific action so that business value can be maximised. In headline terms, a business owner should consider the following:
• Personal financial planning: are you extracting value in a tax efficient manner through dividends, pension contributions and the like.
• Shareholdings: are the shareholdings structured so that taxation is minimised.
• Shareholders agreement: is there a formal agreement that limits the ability of an individual to hold the other shareholders to ransom?
• Financial controls: have you implemented robust financial controls that are fit for purpose and will stand up to scrutiny through the disposal process.
Irrespective of the reason for a business sale, whether through the age of the shareholders or a change in personal circumstances there are several options available to shareholders, which include:
• Passing the business to a family member (family succession)
• Disposal to a competitor or strategic investor • Management buyout • Closure and liquidation of the assets
At Pierce Corporate Finance we will work with you to consider the routes for exit and help you identify:
• Objectives - what are your goals. The reason for exiting can help identify objectives and steps to be prioritised
• Timeline - when is the end goal. The business owner must allow for flexibility in the process
• Market conditions - is your business delivering robust financial results that will attract potential buyers and underpin the valuation
Our practical experience and pragmatic advice help business owners identify a
route to a successful exit and maximises the value achieved. Please do not hesitate to complete our scorecard to get your report on how sale-ready your business is
https://report.pierce.co.uk/
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DEALMAKERS
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