Steven Bell Corporate finance director
/PierceCA @pcaltd /piercecaltd
looks to maximise its chances of having a sustainable business.
Peter describes the approach as one of “protection” and says: “Having a balanced portfolio of businesses increases our chance of profits and effectively reduces the risk of losses.
“Usually, if one channel within the business is suffering due to external factors outside of our control - for example, weather related disruption could be lower than usual - we see a spike elsewhere.”
He adds: “The acquisition has to be related back to the core in some way.” Another increasingly important part of the strategy is looking at how the various arms of the business can interact and open up opportunities for each other through collaboration. Joining up the dots and seeing that bigger picture.”
Expert View
HOW ESG IS MAKING AN IMPACT By David Filmer, partner Forbes Solicitors
Over recent years we have seen an increase in businesses aligning their values to Environmental, Social and Governance (ESG) principles.
Businesses are finding themselves subject to closer inspection than ever before, as focus shifts to ensure that a business is seen to be prioritising ESG to investors, customers and employees.
ESG reporting is now required for major UK companies - those which are ‘listed’ or ‘quoted’, have an annual turnover of £500m or more or where there are more than 500 employees.
While many businesses are not yet required to report on ESG, many are doing so as a matter of best practice.
So how does this affect your business? On January 17 last year, the Task Force on Climate-Related Financial Disclosures (TCFD) mandatory financial disclosure requirements came into force.
The requirements apply to financial years from April 6, 2022 onwards and require a major company to incorporate climate disclosures into their annual reports.
The disclosures should cover how climate change is addressed in corporate governance, the impact on strategy and how
climate related risks are managed.
The effect of ESG can also be seen in the marketplace where it is said that two- thirds of investors are now considering ESG factors when investing in a business and that investors are keen to ensure that businesses are reducing their waste whilst maximising conservation of energy and other climate considerations.
We are also seeing a rise in sustainability linked loans which contain specific ESG conditions which can include a reduction in CO2 emissions and a commitment from the business to lower consumption in their daily activities.
When it comes to employment, businesses are repeatedly being asked to prove that they prioritise ESG goals and have a commitment to sustainability.
While the financial disclosures may not apply to all businesses just yet, there are many opportunities for all businesses to get ahead.
Even if a business is not seeking any investment just yet, developing and adopting ESG values can benefit by lowering operating costs, improving a business’s reputation and attracting new customers and employees.
LANCASHIREBUSINES SV
IEW.CO.UK
Peter says: “We are seeing the benefit of these acquisitions in terms of the collaboration. And we are using our infrastructure to be able to support and grow the businesses.”
The group remains on the lookout for acquisitions that fit its criteria and has eyes on expanding further across Europe and into the Middle East. Peter adds: “We are still growing the company organically as well as through acquisitions.”
He says it is important to take a strategic and measured view when it comes to selecting potential targets as part of a buy and build strategy.
And he adds: “If you aren’t clever with your selections you could end up going round in circles and not achieving anything. Don’t just buy because you like buying.”
PLAN EARLY AND CONSIDER OPTIONS FOR SUCCESSION
Succession planning can be a complex and time-consuming process, so it is important for business owners to start planning as early as possible.
How prepared are business owners for success through succession? The level of preparedness for succession planning varies among business owners. While some have been considering an exit for a considerable time, many are impacted by a single event, such as illness, a realisation which creates an immediate pressure to find a solution. When it comes to succession planning, starting early is important to shape the business to ensure a smooth, successful transition.
Why do business owners put off succession planning? Retirement and succession planning can be a significant topic to contemplate. A lack of clarity in respect of what you want to achieve: financial security, sustainability of the business, security for staff, often results in owners procrastinating.
What ensures a smooth process? Starting early and being clear about what you want to achieve is essential to ensure a successful transition, whether through trade sale, management buyout or sale to an employee ownership trust. We advise that business owners engage with an advisor, ideally two years in advance of a transaction. This allows the business time to implement controls and policies to ensure the value is maximised. Issues to consider include ensuring key contracts are in place, ensuring working capital is managed effectively, improving profitability or strengthening the management team if needed.
What tips can you give to someone considering succession? Consider your options. Plan early. Work with a professional advisor.
The Pierce Corporate Finance team has the experience of delivering these transactions.
Call us on 01254 688100 or visit
pierce.co.uk
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