Whilst many local firms have downsized their corporate finance departments – the teams who originate and process business sales, purchases, mergers and fund raising – Price Bailey Chartered Accountants has kept the faith and seen a steady flow of instructions and transactions through the department this year. These have been across diverse sectors ranging from a number of deals in the residential caravan park sector to the construction and oil industry.
Lawrence Bailey, a partner with Price Bailey’s corporate finance team, comments on the state of the corporate finance sector.
Lawrence Bailey said: “I have been fortunate in not only transacting business sales but also being very active in reconstructions as companies seek to strengthen their balance sheets and in share buy backs as shareholders have sought to consolidate their positions by buying out minority shareholders or those who wish to retire.
“Price Bailey’s tax consulting team has a number of innovative ideas for ring fencing hard earned cash reserves; the most popular being the ‘sideways punt’ (not those wayward tourists on the river Cam, but a clever method of moving cash reserves tax free out of an existing group). Recognising and driving these opportunities means that all Price Bailey’s consulting teams work closely to produce shareholder value.
Bailey continues: “Activity generally falters over the summer period, although at present there is little sign of any slackening off, and picks up again as busy directors and entrepreneurs return from their holiday break. This year the summer may present a challenge with the much vaunted possibility of a double dip; I can’t remember a double dip in past recessions and hopefully this is just a figment of the journalistic imagination and we shall hold our nerve again this time round and see a further increase in corporate activity throughout the autumn and winter months.
“There is a huge incentive as the recent emergency budget creates real opportunity for those with drive to build on their existing business. There were changes in the taxation on the disposal of shares in owner managed businesses such that a qualifying shareholder may now make a gain of up to £5m and have this taxed at the rate of 10% - an increase on the previous limits of £1m up to 5 April this year and £2m up to the date of the budget – which makes business expansion followed by a later trade sale a very attractive proposition.
“And whatever the state of the market there will always be businesses to acquire, whether this results from economic circumstances, retirement or in some cases the death of the owner and for those with cash reserves this brings the opportunity to expand their existing business. Price Bailey has a number of mandates for the acquisition of businesses in various sectors so it is always worth enquiring if you are considering or looking for an acquisition.
Lawrence added: “Banks and funding institutions are not as liberal in their lending policies as they were a couple of years ago so you will need more cash than would have been required before the recession; it would also help if there are some unencumbered assets to secure any borrowings and whilst bank and institutional negotiations may be challenging for the right deals there will be funding available. Price Bailey has extensive links with all the banks, other funders and individuals and would be able to assist.
“In a nutshell, UK Plc is still in business and corporate finance deals are still being done, but they are more difficult to get across the finishing line. You will need the help of fully trained dynamic professionals and Price Bailey’s corporate finance team are waiting for your call!”
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