48


DOING THE DEAL


Continued from Page 47


But I do know that a lot of other people haven’t had good experiences, so what I’d say is choose your partner carefully.


Growth is central to everything that we do at the moment. PE by its very nature wants growth equity. They want you to drive growth and Lawfront has given us the platform to achieve that.


They will say, ‘go and employ another 20 people’. When the business was ours and we were managing the bottom-line, we were more concerned about the hit on profitability in the short-term that would mean, so we wouldn’t necessarily do it.


But the PE approach is very-turnover driven. They want to see the growth and they will take a view on their investment. What is critical to Lawfront is the strength of the leadership team in the firms they are looking to acquire.


You might have an underlying good business, but if the leadership team is not settled and strong and clear in terms of what they are going to deliver going forward, they won’t invest.


When it comes to PE, be clear about the reasons why you want to go down that route and be clear where you want to get to.


Things can unravel quickly because you have chosen badly or didn’t understand what the


journey was going to look like and didn’t realise what was going to be asked of you. Have those conversations at the outset so no-one is under any illusions.


Another issue for business owners is that they will no longer be making all the decisions. Some people struggle with that.


Your decision is not always going to be final, it is going to be made in conjunction with your partner. If you are not going to be able to deal with that, it is probably not for you.


And you have got to view it as partnership. You are on a journey together. You can’t have it all your own way.


Lancashire is a place that sometimes sells itself short, considering the amount of talent that exists here


Stephen Robinson, Director, PM+M Corporate Finance


ENTER NOW!


DEADLINE FRIDAY 5 DECEMBER


ENTER HERE


redroseawards.co.uk @redroseawards


#RRA26


Chartered accountancy, business advisory and financial planning group PM+M is headquartered in Blackburn.


My team is focused on private company sales valued between £5m and £25m Enterprise Value. There is an attitude towards PE and VC in Lancashire, and it centres around culture and communication.


There is a perception that VC funders are only interested in a very limited number of businesses and that only a small percentage of those businesses are in Lancashire.


There is also a cultural view in Lancashire, and in the north generally, that you give away your equity with great reluctance, unless there is a very clear value add from a provider. It is a very common view.


When it comes to communication, the question should be, ‘Are we talking the same language and do we understand each other?’


Do the business and the funder understand each other when the talk is about growth and does it mean the same thing to them? A lot of these things need to be picked up on and that is where advisors come in.


There is an education piece that needs to addressed before talking to any potential funder. You really have to get to know as much as possible about your potential partners or the key person in that group or fund. If you don’t it is very easy to see private equity going wrong down the line.


Sometimes the business or market completely changes and what was viable becomes unviable. Other times, there just isn’t enough agreement, communication or shared understanding between the parties during the deal process. You have to get that clear from the start. There has to be alignment.


You have to talk about what you mean by growth. When it comes to a trade-off between profit and growth in the next 12 months, what are we actually doing? In practice these are the things you need to think through prior to the investment.


If you get the sense that a partner or funder will change or tweak their approach a little for the same end goal, which is growth, then that is a good sign.


However, when you are dealing with counterparts and they are following a process and will not divert from it, if they are not willing to move at all, that is often an amber flag.


I would say that businesses should keep an open mind about venture capital and private equity investment. Listen and take as many soundings and talk to as many people as you can. And also, be dispassionate.


Perran Cooke, Chief executive, Sowena Group


Sowena specialises in recruiting for pre- or post-private equity (PE), venture capital (VC)-backed, and high-growth companies.


It works closely with chief executives, founders and chief financial officers to create recruitment strategies that support high-growth companies, PE firms and financial institutions.


We work with businesses looking at private equity and VC or are on a growth journey. We partner with banks, PE houses, auditors and solicitors, essentially working with their clients to identify the right talent to push them onto the next level.


Our work helps businesses get the right team together and that process starts before they have even talked to a VC or PE house. Some of the businesses may not know what route they want to take.


We will work with them to talk about what they need now, what they will need in two years’ time, and how they are going to grow their functions and operations if they did want to do an exit in the future.


Cast your net


wide there is a huge amount of investment capital out there at the moment


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