Autumn iDeal 2009

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The Autumn edition of BCMS Corporate's magazine iDEAL featuring market news, deal news fron the UK and USA, case studies and related M&A information.

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Autumn iDeal 2009

  1. 1. M&A NEWS FRO M B CM S CO R P O R AT E A UT UM N 2009 i D E A LA c h i e v i n g y o u r i d e a l e x i t FAMILY VALUES MAKE BUSINESSES ATTRACTIVE PROSPECTS WHY ARE FAMILY RUN BUSINESSES MORE DESIRABLE THAN EVER ? PAGE 8 INSIDE: FREE SERVICES DEAL COMPLETIONS DEAL STATISTICS US DEALS FAMILY BUSINESS FEATURE A SERIAL ENTREPENEUR’S VIEW LIFE AFTER A BUSINESS SALE YOUR QUESTIONS PARTNERING TERMINOLOGY INTERNATIONAL NEWS PHILANTHROPY SUCCESS GALLERY
  2. 2. CONFIDENTIAL BUSINESS EVALUATION MEETINGS If you would like to discuss the sale of your business in a relaxed and confidential environment our free business evaluation meetings offer the ideal opportunity for you to do so. You will be able to discuss, with one of our Business Managers, your current business operations and personal plans for exiting the business. In addition you will be able to find out more about our methods for successfully selling businesses and, if you visit us at our offices, view the considerable resources we have in place to ensure that the maximum possible sale prices are achieved. As a guide, business evaluation meetings typically last for around 90 minutes, however the length of the meeting is primarily dictated by the time you feel you need. The majority of business owners choose to meet us at our Head Office near Newbury, Berkshire; however, our Business Managers are also able to visit you at your own office or alternate suitable location. To arrange your free and confidential business evaluation meeting please call us on 01635 296191 Free seminars During our free, morning seminars we reveal how our approach to selling companies works and why this, as opposed to the traditional methods, leads to a maximised sale price. A step-by-step guide takes attendees through our sale process, from contacting potential acquirers and receiving offers through to price negotiation and sale completion. If you would like to book onto one of these seminars please visit www.bcmscorporate.com or call 01635 296191. Video interviews of past clients Is our service really as good as we claim? Find out what six business owners, who used our refreshingly different approach to sell their companies, thought of our process at www.bcmscorporate.com. Questions covering all aspects of our service, from the initial stages right through to completion, ensure compelling viewing. 2
  3. 3. i D E A L The UK is stubbornly refusing to follow some of its closest trading partners out of recession and into growth. Despite this however, and as this recession runs its course, our experience continues to be somewhat at odds with reporting and we have much to be optimistic about. In this issue of i D E A L You will see from the selection of deals completed in the last quarter, demand by acquirers for good businesses is still Deal completions page 4 strong both here and in our other offices around the World. A selection of just some of the deals BCMS Corporate has completed in the last quarter Recent deal statistics page 6 Also in this issue, our lead article focuses on the role family A summary of recent deals completed by us. businesses play in the economy. A range of independent US Deals page 7 surveys confirm both my own experience as Chairman of a Case studies of two US deals completed by our family business and what our clients tell us. One of the key New York office. traits of many family businesses and smaller and medium Keep it in the family? page 8 sized private enterprises in general is their flexibility, a Why family businesses will play a key part in the capability to embrace change and innovate, not just from the economic recovery and why they represent some of top down but right across the business. When owners wish to sell though, it is possible to pass the business to a new owner the most attractive business opportunities. Exceeding expectations page 10 whilst protecting the unique culture and employee prospects. A serial entrepreneur’s view of the BCMS Corporate process for selling businesses. I expect that, like so many other disruptive times in the past, Selling your business and improving businesses will successfully evolve to suit new circumstances your quality of life page 11 and ultimately be well placed to thrive. Like many of our Stefan Wissenbach, CEO of the Wissenbach Group shows clients we have taken the opportunity that the current how to manage ‘life after business’. recession has presented to look at every part of our business Your questions answered page 12 model and have honed, fine-tuned and modified where How do I locate the right number of potential acquirers needed. Arguably we may not have done this were it not for current circumstances but the benefits have been measurable and what attributes should I look for? Partnering with BCMS Corporate page 13 and sustainable. “What doesn’t kill you makes you stronger,” an observation Dr Mike Sweeting highlights the benefits of partnering with BCMS Corporate. by the 19th century philosopher Friedrich Nietzsche seems Terminology explained apt. page 13 What is a Sale and Purchase Agreement? International news page 14 I hope you enjoy reading this Autumn issue of iDEAL. Positive signs in the US market and Canadian seminars continue to flourish Philanthropy page 15 Charitable work by BCMS Corporate staff Success gallery page 16 Brian Rebbettes - Chairman The latest deals completed by BCMS Corporate iDEAL is published quarterly by BCMS Corporate, Kingsclere Park, Kingsclere, Newbury, Berkshire, RG20 4SW, UK and is copyright protected. Reproduction in whole or part without written permission is strictly prohibited. While every care has been taken during the preparation of this magazine, BCMS Corporate cannot be held responsible for the accuracy of the information herein or for any consequence arising from it. BCMS Corporate accepts no responsibility for the views expressed by contributors. Opinions expressed do not necessarily reflect BCMS Corporate policies. The articles in this magazine are intended to be for general information only and should not be used as the basis for divestment decisions. BCMS Corporate, its staff and contributors do not accept any liability for any loss suffered by readers as a result of decisions made purely on the basis of the contents of this publication. Professional advice should be taken in relation to all divestment decisions. BCMS Corporate is a trading style of BCMS Corporate Limited. 3
  4. 4. BCMS Corporate• D e a l co m p l e t i o n s A positive report from Jacqueline Webb & Co. Niche businesses can often be perceived as offering far greater exit challenges than those of ‘mainstream’ businesses. F inding an acquirer who provides a future care requirements of people BCMS Corporate Deal Leader Scott strategic fit or even one who is who have suffered catastrophic Jones said ‘Due to the diverse range simply looking to diversify into an injuries. Despite its niche activity, of potential acquirers the offers and obscure market can seem to be a far careful research and highly effective structure of the offers were varied. from easy task. However, for many prospect generation produced 39 Despite the considerable interest in niche businesses, scarcity value is signed Non-Disclosure Agreements the company from potential acquirers their unique selling point. Niche from potential acquirers, a significant with a strategic fit, our clients businesses rarely come to market and number for a business which could be selected a private investor/acquirer alternate options for potential perceived as having few potential who had previously purchased one of acquirers are either extremely limited suitors. From these potential our other clients from a completely or simply non-existent. acquirers a highly significant 24 different business area. Overall the One such example is Jacqueline meetings took place and an excellent sales process ran smoothly with both Webb & Co, a company providing 8 offers were received in total. our clients and the acquirer being courts/lawyers with reports on the keen to complete the transaction.’ Home is where the deal is for CM community Having built a strong and well respected business in the care industry, CM Community directors Christine and Malcolm Hall were only too aware that relationships with people are key to the L continuing success of any business. ocating an acquirer for their venture with 78 staff and a significant Ltd to SevaCare in a relatively short business was about far more than number of clients, generating a six timeframe and despite tough simply a maximised sale price, ethos figure turnover. economic conditions. Christine and and company values held equal value. Recognition of the excellent Malcolm wanted to retire but were CM Community Services Ltd, a performance of the business was not still passionate about their business provider of domiciliary, community lost on many of the potential and the reputation they had built up healthcare and specialist services acquirers identified in the health and within the care sector. The ethos and based in Huddersfield, was founded social care sector. Indeed, 74 company values of the potential by Christine after a career in nursing. potential acquirers agreed to sign acquirer were just as important to the Utilising her considerable experience, NDAs to find out more about the clients as the overall deal value.’ Christine took the step into business and 15 met to discuss In a letter of thanks, Christine and franchising and became a franchisee further information and offers. As a Malcolm said ‘Contractors don’t of SureCare Community Services, a result 7 offers were received with always deliver what they promise and provider of temporary and Christine and Malcolm eventually we debated for some time before permanent health and social care accepting an offer from SevaCare signing up to your services. Because services. The franchise expanded which provided an exceptional of that we want you to know that successfully and, in 2002, Malcolm strategic fit. your team delivered in spades.’ joined the business. After buying out The sale was managed by Ilan For a full copy of the letter please the franchise and incorporating the Elfassy, BCMS Corporate Deal Leader. visit www.bcmscorporate.com and business in 2006, CM Community Says Ilan: ‘We managed to complete visit the What our clients say page. Services Ltd developed into a thriving the sale of CM Community Services 4
  5. 5. BCMS Corporate• D e a l c o m p l e t i on s Deal summary Milsom Industrial Designs Limited Potential acquirers identified 291 Non-disclosure agreements signed 50 Qualified acquirer shortlist 15 Offers received 5 Deal duration (months) 14 CM Community Services Limited International interest Potential acquirers identified Non-disclosure agreements signed 74 284 secures Milsom Qualified acquirer shortlist Offers received 26 7 Deal duration (months) 12 It is well documented that organic expansion into foreign Jacqueline Webb & Co Ltd markets is fraught with risk. Indeed this route is so perilous Potential acquirers identified 179 that less than three per cent of companies choose to globalise Non-disclosure agreements signed 39 A in this manner. Qualified acquirer shortlist 11 ppointing agents or distributors it generated but also because, Offers received 8 in foreign markets is similarly unusually, approximately 90% of the company’s revenue was Deal duration (months) 16 unsuccessful with the Institute of Exports reporting that 12 out of 13 generated from one client, partners fail in the short term. AgustaWestland helicopters. For Deal summary key In view of this, the safest option is to any potential acquirer, a business which is so heavily reliant on one Potential acquirers identified: The number of prospects acquire an existing company in a foreign market and the recent client poses significant risk. identified by our in-house team of researchers through successful sale of Milsom Industrial However, as BCMS Corporate Deal their initial desk research. Designs Ltd to US based General Leader Sunita Meigh explained, Non-Disclosure Agreements (NDA) signed: The number Physics highlighted this. Indeed, three “The reliance on one client of NDA’s represents the number of potential acquirers of the five competing acquirers presented far less of a risk than it which have indicated an interest in our client’s business originated from countries other than may have initially appeared. Milsom had worked together with by requesting further information. Before this is given the UK. AgustaWestland for so long that an ‘NDA’ is signed by them. Milsom Industrial Designs operates the two companies had formed a Qualified shortlist: The result of an exhaustive process in a niche market, providing specialist symbiotic relationship. Many of the technical services, predominantly to undertaken by our Project Managers to ensure the most staff employed by Milsom were ex- the aerospace and defence industry suitable potential acquirers are taken through to the MoD staff with extensive and with both shareholders latter stages of the deal. experience of the industry. This recognising that the time to sell their experience and the unique working 1st and revised offers: The result of our work to ensure business was nearing, they selected relationship that had developed the post-deal benefits of the acquisition are clearly BCMS Corporate to help sell their were simply irreplaceable, thereby understood by the acquirers. business. removing almost completely the Live to market: The point at which our specialist The sale of Milsom Industrial risk of their client ceasing to Prospect Generation Team start to speak to potential Designs proved notable not only employ their services.”’ because of the level of foreign interest acquirers about an opportunity to acquire a client’s company. 5
  6. 6. BCMS Corporate• D e a l s t a t i s t i c s Globe Worldwide Limited Activity: Project management services Recent deal Potential acquirers identified Non-Disclosure Agreements signed 340 50 statistics summary Qualified acquirer shortlist Offers received Deal duration (months) 6 2 21 Barnes & Mullins Limited With a highly successful summer behind us Activity: Wholesaler/distributor of musical instruments there isn’t the space in iDEAL to cover every one Potential acquirers identified 235 of our deals; however we have included a Non-Disclosure Agreements signed 35 selection from those that we were unable to Qualified acquirer shortlist 6 cover in more detail. If you would like to find out Offers received 3 Deal duration (months) 19 more about any of these deal completions please call us on 01635 296191 Tsunami UK Limited Activity: Exclusive kitchen design Potential acquirers identified 348 Non-Disclosure Agreements signed 36 Qualified acquirer shortlist 7 Offers received 2 Deal duration (months) 23 Timstar Limited Activity: Supplier of laboratory and educational products Potential acquirers identified 240 Non-Disclosure Agreements signed 36 Qualified acquirer shortlist 2 Offers received 2 Deal duration (months) 9 Peeping Limited Activity: Provider of rail passenger footfall data Potential acquirers identified 185 Non-Disclosure Agreements signed 15 Qualified acquirer shortlist 6 Offers received 2 Deal duration (months) 12 Cortest Limited Activity: Non-destructive material testing Potential acquirers identified 205 Non-Disclosure Agreements signed 35 Qualified acquirer shortlist 6 Offers received 3 Deal duration (months) 10 Jack Ellis Body Protection* Activity: Design and manufacture of body armour Potential acquirers identified 34 Non-Disclosure Agreements signed 12 Qualified acquirer shortlist 4 Offers received 3 Deal duration (months) 10 *Negotiation only project 6
  7. 7. BCMS Corporate• U S d e als Future potential secures PPS LLC Without exception, it is the future potential of a business that is the key reason for an acquisition. For New York based Precision Pipeline Solutions LLC it was the future of their business which I brought two very different potential acquirers to their door. n 2008 the business had been Capital Partners eventually providing service businesses become stronger approached by a seemingly well the optimal combination of competitors, and we believe their motivated industry participant. The transactional value and managerial support will help us continue to grow relationship between this potential support. our business.’ acquirer and PPS was very positive ‘The energy infrastructure in the ‘All of us at Sentinel are excited to and so the firm chose BCMS United States, particularly in older partner with PPS’s management Corporate’s Negotiation Only service cities, such as those in the Northeast, team,” added Eric Bommer, a partner (see www.bcmscorp.com for more where PPS operates, has a continuing at Sentinel. “Not only are Jon and his details) to help them with the need for the services provided by team highly skilled and experienced, management of the transaction. PPS,’ said Michael Fabian, a Vice but they possess an outstanding However, with a low offer, a lack of President at Sentinel. ‘We believe this reputation with utilities throughout strategic motivation and sale terms is a promising market in which to the Northeast. We are eager to help which favoured the potential invest, and PPS is particularly well them build on this foundation and acquirer, it quickly became apparent positioned for growth.’ expand PPS’s presence.’ to the BCMS Corporate team that an ‘We take great pride in the critical improved offer could be achieved services we provide for our utility through another acquirer. Precision Pipeline Solutions LLC clients,’ said Jon Selander, founder At this point the BCMS Corporate Potential acquirers identified 267 and CEO of Precision Pipeline team took PPS to a wider market, Solutions. ‘There is considerable Non-Disclosure Agreements adding strategic prospects and demand for service providers like PPS signed 37 utilising a strong relationship with that approach utilities with a Qualified acquirer shortlist 11 the VC and Private Equity community. partnership philosophy and a broad Offers received 5 The Private Equity community took portfolio of services. The Sentinel team has a reputation for helping Deal duration (months) 18 a keen interest in PPS, with Sentinel expansion with a number of acquisitions, growing to a current A competitive total revenue of $6.2 billion and staff of more than 74,000 (one of their acquisitions being Syan step for Holdings to which BCMS Corporate had sold two companies in the past). With an existing Pharm/DUR Inc. pharmacy audit and verification business, which the company Without exception, it is the future potential of a business that is the key began five years ago, the acquisition by ACS strengthened F reason for an acquisition. the firms’ position in the or New York based Precision they eventually felt the potential marketplace. Pipeline Solutions LLC it was the acquirers didn’t provide an optimal future of their business which match for them. brought two very different potential The firm was then taken back to Pharm/DUR Inc. acquirers to their door. The US firm, market and subsequently agreed that Potential acquirers identified 283 which has a nationwide auditing the highly acquisitive parent Non-Disclosure Agreements platform that reports inaccuracies in company of a close competitor may signed 24 pharmacy transactions, identified provide the answer. Dallas-based ACS Qualified acquirer shortlist 6 their preferred acquirer very early in (Affiliated Computer Services Inc.), a the sale process but, after lengthy major business process outsourcing Offers received 5 negotiations, due diligence and the firm had a strong track record in Deal duration (months) 25 agreement of an S.P.A. (see page 13) acquisitions and had fuelled its 7
  8. 8. BCMS Corporate•Keep it in the family? Keep it in the family? Though not of their making, family firms will play a vital role in the economic recovery from the current recession – they are major contributors of new job and wealth creation. Innovative, resilient and adaptable, succession is not always right or practicable for a family firm. Where a sale is the best route, they represent, in terms of potential, some of the most attractive opportunities for acquirers. How did we get where we are? platform for future growth. businesses. The current recession is the BCMS Corporate is itself an award A report compiled by Capital culmination of one of the most winning family business and many of Economics, commissioned by the distorting decades. World Wars our clients are founders, second or Institute for Family Business * - titled excepted of man-made folly in third generation family business ‘The UK Family Business Sector’ – memorable history. In the last decade owners, so it is right that we declare aggregated evidence from a wide governments – most notably in the an interest here when championing range of surveys of family firms. West – kept interest rates too low for family businesses. Surveys from a Statistical highlights revealed that too long, chasing conveniently range of independent sources though family firms are estimated to account skewed inflation targets which were do confirm that family businesses are for a remarkable 3 million of the total set too high in light of price deflation fundamental to innovation, job and 4.6 million private sector enterprises being imported from India, China and wealth creation – in fact, according to in the UK economy and, 41% of all other low cost economies. There has The International Family Enterprise firms employing 10 people or more. been lax control over the supply of Research Academy (IFERA) there is a Further, family firms account for 38% money leading to a boom of easy very close correlation between the of turnover in [personal and corporate] credit number of family businesses in an the private causing asset bubbles. In the absence economy and sector and of effective regulatory oversight, entrepreneurial contribute reckless speculation by Banks was activity. The Global permitted, dealing in complex Entrepreneurship financial derivatives which no one, Monitor also not even the bankers, really asserts that most understood. Business models became entrepreneurial distorted by relying on start-ups usually excessive debt, the begin as family perception of management competence has subsequently been exposed in many such firms, salary levels, job and wealth creation in some firms and sectors have proven to be unsustainable. The numbers Family businesses though largely didn’t succumb to these distorting conditions, most continued to practice traditional good governance, running sound profitable businesses with low debt. Thankfully, family businesses are generally more risk averse and likely to take a patient approach to growth and as such provide, in many cases, a solid 8
  9. 9. BCMS Corporate•keep it in the family? twice as much to the economy as Succession or sell who established their family business private equity-backed firms (when Somers Refrigeration Ltd in 1990, a Despite their many strengths, family compared with British Venture business supplying temperature firms do struggle in much the same Capital Association estimates for the controlled vehicles predominantly to way as any other private firm with performance of Private Equity-backed the food industry. the issue of succession or exits. An firms). Family businesses account for Stuart and Gail originally attended annual survey by the Department for around 42% of private sector one of our seminars and compared Trade and Industry (DTI, now part of employment, providing employment what we had to say with what was the Department for Business for 9.5 million people. offered by ‘competitors’. In Stuart’s Enterprise and Regulatory Reform DBERR) found that 77% of family words, “BCMS was the most expensive firms in the SME sector are controlled of all those we considered but we Family values Impressive as the statistics are, it is by the first generation, 10% by the believed they had the resources to perhaps the behaviour of owners second generation and 6% by the first undertake the sale. I can highly which really reveals the true nature and second generation. Further, a recommend BCMS.” and relative strengths of family Barclays survey of family firms, “A businesses. Particularly pertinent to Family Affair; Today’s Family the current economic circumstances Businesses,” suggests that most have are findings in the Coutts 2005 no definitive plans about what to do Family Business Survey which with the firm in the future, with 61% revealed that family firms are more of owners saying they had made no likely to invest for the long-term and decision about what would happen focus on long-run returns, rather when they stepped down from the than quarterly results. There is helm. Of the remainder, 16% had evidence that families tend to draw already decided on a successor, 13% smaller salaries and dividends, planned to sell the business, while allowing more profits to be re- 10% planned to close down. invested back into the business. In a Where owners of family firms no further survey “Trust as a competitive longer see generational transfer as advantage: why family firms have an viable or desirable, they provide some edge in the global marketplace,” by of the most compelling opportunities Typical of many family businesses, Baskin, it is argued that family for acquisitive trade or Private Equity Stuart and Gail were very close to businesses are more prepared than buyers; these firms have significant their staff and the successful buyer other firms to continue investing potential for growth. It is clearly vital had to offer stability and continuity during downturns, giving them an that the potential of such a significant for them. One prospective buyer had advantage over other quoted and contributor [Family Firms] to the plans to close the existing site and Private Equity-owned firms where Nations’ economic well-being is consolidate operations which would investment tends to follow cash flow maximised. A ‘knowledge gap’ clearly have threatened jobs – this was more closely. Other findings across a exists, preventing owners of family rejected immediately by Stuart and range of surveys suggest that in businesses making definitive plans. Gail. Ultimately the sale of the family firms, managers and owners Going some way to addressing this business was concluded with the interests are better aligned, staff ‘knowledge gap’, BCMS Corporate ‘right’ purchaser (culture could be loyalty is higher, working practices runs around 60 free seminars each maintained) at the ‘right’ price for are more flexible, corporate social year in the UK and its senior Stuart, Gail and the staff. Stuart and responsibility is taken more seriously managers and directors are invited to Gail’s expertise has not been lost to and the management approach is speak at numerous events in the UK the business, they have continued to more flexible with quicker decision and overseas on the subject of selling provide consultancy services and making. for maximum value. For those 84% of have set up a joint venture with the There are also well documented family business owners who have new owners. disadvantages such as the danger of either no clear plans about succession You can find a list of all our nepotism; a reluctance to bring in or selling or who may even be seminars by visiting our website outsiders or Non-Executive Directors considering closing down, the BCMS www.bcmscorporate.com where you in larger firms; family conflicts, such seminars may well be helpful in can also book a seminar seat. You can as divorce and infighting, all of which deciding what the right course of also view Stuart and Gail’s account of might disrupt the business and action might be, providing a valuable working with BCMS Corporate as well hamper growth. There is good perspective before crystallising plans. as additional recorded interviews evidence however that the advantages with other clients. outweigh the disadvantages. *The Institute for Family Business Their own words Manchester Business School created a Via our website, bcmscorporate.com, was established in 2001 as an Family Business Index of publicly you can also access video recordings independent, not-for-profit quoted family run firms, which of interviews with a small selection of organisation. The UK Family Business outperformed the FTSE All-Share by BCMS Corporate clients. One Sector report can be viewed at an impressive 40% over a ten year recording features Stuart and Gail www.ifb.org.uk. period 1995 to 2005. Shreeve, a husband and wife team 9
  10. 10. BCMS Corporate• A r ef r e s h i n g l y d i f f e r e n t a p p r o a c h A refreshingly different approach Most of our clients will only ever undertake one business sale, but exactly what does a serial deal-maker think of the BCMS Corporate approach? P aul Daniels is what some would experience of many ‘competitors’ to ordinarily never have considered – in call a serial entrepreneur, he BCMS Corporate, for me BCMS fact they delivered to the letter, admits that what he is best at is Corporate had the best track record”. exactly what they promised.” seeing solutions to problems, After an initial discussion, Paul was Despite being a serial deal maker, developing those solutions to the invited to our Head Office in Paul Daniels’ motives are still very point where they have been Kingsclere (we like to ensure that all much aligned with those of the commercialised and their value has our prospective clients at some point majority of our clients. He is mostly been proven, before selling that get a chance to see for themselves the involved with his businesses from business and moving on to his next scale of our operations). Paul said, “I start-up through to sale and as such, challenge. was also persuaded by the resources there is a very strong bond between Like most serial entrepreneurs, by deployed by BCMS Corporate on him and his staff. This was very much necessity, Paul has also become a behalf of their clients. Their research a factor in selecting the successful serial deal maker, going through the department was substantially larger bidder in each case. business sale process on a regular than any I had encountered The traffic controls business sold to basis. He explained, “My approach to previously (see Your questions a ‘trade’ buyer, the bid was actually deal making in the past has been answered – page 12). He continued, the third highest but it was the best almost intuitive, selecting the buyer “I was also impressed by a team fit, in Paul’s view, for the company and negotiating the best deal. When approach, each member undertaking and staff. The advertising business we set a company up we often had a particular specialisms, each working sold to a Private Equity buyer with buyer in mind – typically this to their strengths. Paul Daniels retaining a significant approach involved little or no The logic of the BCMS Corporate stake by re-investing some of the sale competition.” approach was compelling so we proceeds back into the business. Paul was introduced to BCMS decided to place both mandates with Corporate at the point where he was BCMS Corporate and both companies You can listen to Paul Daniels’ considering an exit from two of his sold at a price we were extremely account of his experience by clicking companies and was persuaded to at happy with. Crucially, as BCMS the ‘Client video interviews’ link on least investigate the BCMS Corporate Corporate assured us, the process the home page of our website approach. The companies operated in created competition and brought to www.bcmscorporate.com. two very different sectors, traffic the negotiating table some very controls and advertising. “I have ‘unlikely’ competing buyers we would 10
  11. 11. BCMS Corporate• S e l l i n g y o u r b u s i ne s s Selling your business and improving your quality of life Quality of life is more important than quantity of wealth. A bold statement, but for over 19 years we at The Wissenbach Group have been working with our clients to help them improve their quality of life. We passionately believe that the rest of your life should be the best of your life – and why not!? S o, what do we mean by ‘quality of want to get the best possible price for The Wissenbach Group helps life’? To us quality of life is very your company, but crucially before business owners and entrepreneurs much about being in good health and you sell, you also need to think about visualise and plan better futures, and having the freedom to do the things the impact of having sold your this often includes thinking about life you want to do, with the people that business and what that actually post-sale. We have, during this time, you want to do them with. Two of the means to you in terms of your quality identified five key steps to improving most important commodities which of life. future happiness: enable you to achieve this are time One of the most common mistakes 1 - Proactively consider how you and money. We often find that that business owners make when it would like the rest of your life to business owners and entrepreneurs, comes to selling their business is that look. People seldom plan to fail, they in particular, have an imbalance – the they focus entirely on the money simply fail to plan. time and money aspects of their lives rather than quality of life. In fact, 2 - Establish the financial are not necessarily in harmony. We some entrepreneurs’ lives are so implications of what you want to do, meet lots of people who have plenty dominated by their businesses that i.e., what will it cost to achieve and of money but not enough time or in doubts can creep in as the conclusion enjoy your desired lifestyle? This is contrast, too much time and not of the sale approaches – almost a what we call your Magic Number™, - enough money. Neither situation is a sense of panic – a “what do I do now” the amount of accumulated wealth recipe for future happiness. crisis of confidence. No one ever died you need in order to be financially It’s common for business owners happy because they’d made lots of independent, enjoying your desired and entrepreneurs to find themselves money – a distorted/incorrect lifestyle, for the rest of your life. in a position where the business they perspective can often be provided by 3 - Reference the financial have spent a considerable time, taking that approach. The key is the implications of your desired lifestyle energy and passion building has life that you are living. against your current position. become all-consuming. They find Picture a large softly lit room, filled their time filled doing things that are 4 - Decide on what needs to change. with family members, extended no longer particularly enjoyable – family, friends and people you enjoy 5 – Take action! Implement change – sorting out staffing problems, spending time with. At the end of the time waits for no man! Some people managing turnover, suppliers etc. room there is a box. You’re in find that working with us is the most Freeing yourself from these responsi- it……it’s your funeral. What would effective way to ensure that action is bilities means you are in a position to you want to hear being said about taken and progress made. As Bill go on and enjoy the freedom of you? Seldom do we find that people Clinton said, “When our memories having more time to do the things answering this question expect people outweigh our dreams, we have grown you want to do. to be talking about how much money old.” I hope this article has provided Selling your business for maximum they had made. They will hopefully you with some food for thought and value can provide you with be talking about how you’d lived your wish you all the best for your future opportunity. Opportunity to pursue life, the contribution you’d made to happiness. your passions, other business other people’s lives, how much they’d Stefan Wissenbach is the CEO of The interests and enjoy the freedom of enjoyed time with you and the quality Wissenbach Group. He can be spending time with those that you of the relationships you’d built with contacted on 01676 524460 or by love, doing the things that make you family and friends. email - stefan@wissenbach.co.uk happy. I believe that not only do you 11
  12. 12. BCMS Corporate• Y o u r qu e s t i o n s a n s w e r e d Your questions answered In each edition of iDEAL, a senior member of our management team will address one of a number of common questions we are asked by business owners. In this edition Derek Wickens, Head of Research at BCMS Corporate, explains our unique approach Q to research and why it is both necessary and effective. : I downloaded your book from your website which states that you locate, on average, 230 potential acquirers for each of your clients. I’ve been told by other business sales companies that this isn’t necessary. Why do you do this? A : It is important to note that underpin their judgement. volume is not a goal in itself, An initial search using criteria the average of 230 potential buyers is agreed with our clients, can produce simply a consequence of the thousands of results, the painstaking comprehensive nature of the research process of qualification then begins. we undertake and the man-hours we We view company websites, check invest, on behalf of our clients, in company structures, identify the additional screening and most appropriate decision-maker, qualification. Is this necessary? Yes, review announcements to market (if absolutely. As a starting point, we PLC’s), product ranges, customers believe there is simply no other etc. This enables us to make reliable way of selling a business for informed judgements about which its maximum value. I have explained companies have the best synergies, more about our unique capabilities allied to other factors like strong below which I hope further financials. emphasises the necessity of what we do and how this Synergies, in other words, overlapping features and benefits our clients. benefits are vitally important, they are the things which we know from experience, strategic buyers view as most valuable. Source data In pure financial terms our investment in third party data is, after the Company’s salaries, our biggest Recent examples investment. We review data products constantly to ensure 1. An energy consulting company we represented was that our researchers and analysts have access to the best bought by a forestry and engineering firm. We only data available. Unique to BCMS Corporate though, and discovered the ambition to diversify into energy something which no amount of money could buy, is our consulting via an inconspicuous link from the buyers’ own database containing details of acquirers, their needs website. and wants. This database grows on a daily basis, it is the product of all contact that all staff, right across the 2. A traffic management product company was bought by business, have with companies seeking acquisitions. This a lift control company, entered in our own database after often gives us privileged information, not in the public a conversation with one of our staff, about their wish to domain, about a company’s strategic intent. It can include diversify. This buyer has now gone on to buy another for example, information on diversification plans. This company whose owners were represented by us. In each commonly results in the final research document case the buyer was part of a competitive bidding process containing companies which appear, based on public involving other strategic buyers we had identified domain information, to be unrelated to our clients through the customary research process. businesses. It is surprising how often an ‘unlikely’ 3. A supplier of sports equipment to schools was bought company becomes the successful buyer. by a manufacturer of street furniture. Again, the buyer was only identified through the meticulous, manual The human factor qualification process. Data is important but the human factor is absolutely Without this approach we passionately believe that your critical to success. Databases are only as good as the way most suitable acquirer may never appear in the final list. the information is categorised, assembled and can be All our prospective clients are very welcome to tour our searched. Companies are invariably listed under broad head Office to view for themselves the scale of the ranging generic headings which makes ‘drilling down’ to resources which are applied to the task of selling their locate only those that are relevant very difficult. To company. overcome this problem, BCMS Corporate has assembled To arrange an appointment for a no-obligation meeting what we believe is the most experienced Research simply call 01635 299616 and ask to speak to one of our Department in our sector – collectively our Research business consultants. Department has more than 80 years experience to 12
  13. 13. BCMS Corporate• P a r t n e r i n g Partnering with BCMS Corporate The majority of our clients hear about BCMS Corporate at one of our weekly seminars, however a significant number are referred to us by a select group of ‘partners’ A which introduce BCMS Corporate to their business clients when they are considering a sale. t BCMS Corporate we will be arrange a tour of our Head Office to The refreshingly different approach extending the number of show you what we describe at our to the sale of privately owned ‘partnerships’ over the next twelve seminars being put into action. companies has made BCMS Corporate months and, if you feel our services Our existing ‘partners’ share our into a market leader; securing may be complimentary to your own views on the inherent flaws in maximised sale prices for hundreds of and, crucially, meet the needs of your traditional methods of selling. They business owners. clients, we would welcome an initial recognise that many company owners Working as a referral partner with discussion. Typically our ‘partners’ do not take their businesses ‘to us is a ‘double win’. Your clients’ are accountants, consultants, IFAs and market’ because they do not think businesses are placed in experienced occasionally individuals. they can obtain the kind of money and successful hands whilst you It is extremely important to us that they believe their company is worth receive a share of our standard fees our ‘partners’ clients truly benefit or raise the money they feel they when they become our client and a from recommending us. We want need. Others believe that there is no slice of our success fee when a deal is both you and them to feel totally demand for a business like theirs. completed. comfortable with the professionalism In fact, any company is worth as If you are interested in becoming a and effectiveness of the service we much as someone is prepared to pay BCMS Corporate referral partner, provide. As a result we would like to for it. If a company is poorly please contact Dr Mike Sweeting at invite you to one of our free seminars marketed, or not marketed at all, then mike.sweeting@bcmscorporate.com (dates below) which have been of course there is going to be a very or 07779 652 066. specially tailored for referral low benchmark on value. Many partners, allowing you to find out companies do not sell because the more about us and how we can help right buyers, with the right motives, Seminar dates both you and your clients. In just half do not know they are available. Many 25 November – Leeds – Thorpe Park a day we will revolutionise the way company owners receive ludicrously you see business exits. Additionally, low offers because buyers believe 1 December – Birmingham – The Belfry we would also be very happy to they have no options. 8 December – London – Maida Vale BCMS Corporate• T e r m i n o l o g y e x p l a i n e d What is a Sale and Purchase Agreement? T he Sale and Purchase Agreement and warranties about the business. agreed the contents of the SPA it is (SPA) is, in its most fundamental Ideally, a vendor should try to avoid, signed by both parties. The contract form, the legal contract that obligates or at least limit, any warranties or will state the date at which the final an acquirer to buy a vendor’s guarantees for which they can be held transfer of ownership and possession company and the conditions under legally accountable. The SPA should of the business will occur, and when which this will take place. Its contents also clearly state which liabilities the the seller will get the money. are the culmination of often lengthy acquirer assumes and which will and complex negotiations. remain with the vendor. Customarily, an acquirer's lawyer The SPA is often a lengthy and provides the initial draft of the SPA complex document; for some of the however it is advisable that the larger deals the SPA can run into vendor’s lawyer should also draft the hundreds of pages. It is vital that the sections which are particularly vendor fully understands the important to the vendor. In the implications of all elements of the majority of cases this relates to the SPA. clauses containing representations Once the vendor and acquirer have 13
  14. 14. BCMS Corporate• I n t e r n a t i o n a l International news BCMS Corporate success in North America, Canada, the Mediterranean, Eastern Europe and Scandinavia. and Eastern T Mediterranean United States he business environment continues Elsewhere, in Texas a specialised to improve in the North American Prospect Generation Team has been T market. While small and middle set up to supplement the existing Europe market transactions have maintained proactive calling capability. In total he effects of the unstable economic a healthy tempo during the recession, the BCMS Corporate team in North environment continues to affect it is considered a good sign here that American (USA and Canada) is 40 all business operations in Romania three major deals bode well for the strong and continues to expand. and Bulgaria, however the Turkish M&A sector as a market is beginning to recover from whole. the effects of this as confidence in the E Specifically, Canada economy improves. Despite the Walt Disney depressed Romanian and Bulgarian arly September marked BCMS purchased markets an ever increasing number of Corporate’s first seminars in Marvel visits to the multi-lingual website British Columbia with over 150 Entertainment (www.bcmsaka.com) continues to attendees in addition to well attended Inc., Baker demonstrate that there is strong seminars in nearby Seattle and Utah. Hughes levels of interest in the M&A market North American Director Bob purchased BJ in Eastern Europe. Goldsmith said “Canada is another Services Co., and new market for us and the response For more up to date information on eBay announced to our seminars has been incredible. this market please visit our new blog the sale of its majority stake in Skype, The seminar in Vancouver was one of at http://www.bcmsaka.com/blog/tr/ a transaction that multiple parties bid the largest we have seen.” To manage (English/Turkish languages only). on. These recent large strategic sales the influx of resulting new clients an are a distinctly positive sign about office has now been set up in Calgary, economic stabilization, rebound, and comprising a (UK) Team Manager, an unlocking of the credit markets. Deal Leader, Project Manager, and In the market for transactions, Researcher. Further seminars in $100m and below, we have seen real Canada are planned before the end of interest in ‘bolt on’ and product level the year. transactions. PE firms have also been observed purchasing small firms to supplement existing portfolio companies because less credit is needed per transaction. Adding further weight to the improving market conditions were the sales, over the summer months, of Precision Pipelines Solutions LLC and Pharm/DUR Inc., both large transactions (more details on page 7) and the acquisition of further new clients in Oklahoma, Georgia and Louisiana. 14
  15. 15. BCMS Corporate• P h i l a n t h r o p y Philanthropy “Do what you can, with what you have, where you are.” Quote on philanthropy attributed to Theodore Roosevelt It never ceases to impress us how much of their time many of our staff and indeed our clients devote to community and charitable causes. In each issue of i D E A L we will highlight just some of the community and charitable activities our staff are engaged in, together with details of some of the charitable projects BCMS Corporate, as a company, also participates in. S Paddle power am White, a BCMS Corporate researcher and a friend, David Hollow have recently returned from spending some time in Uganda working at an orphanage. Their experience left a profound impression on them – they were both struck by the contrast between the extreme poverty they encountered, the warmth of the welcome and sheer resilience of the people they met. More than half the Ugandan population is currently living below the internationally prescribed poverty line. Sam commented, “The orphanage is an incredible place, doing tremendous work with orphans – we met some Their efforts have raised £1,250, with £600 coming awesome people.” directly from BCMS Corporate staff. “This will go a long way to helping improve the lives of the orphaned children Now home Sam and David will continue to support the in Uganda. I know my colleagues devote a great deal of work of the orphanage. Their first fund-raising challenge their own time and money to various charitable causes was to canoe as much of the non-tidal Thames between and once again they have been very generous. Thank you Wiltshire and West London as possible over what turned all so much,” Sam said. out to be a gruelling 48 hours. “I would also like to mention Phil Petty (also a researcher The distance between the two points is 135.5 miles and at BCMS Corporate) who acted as our support crew. He would typically be attempted over 7 days. “Dave had helped massively with the organisation, everything from canoed a few times before but I last canoed when I was finding us a canoe to borrow to raising money. He was on 9, so what was already a very tough challenge was made call the whole time.” even more daunting,” explained Sam. “We were also very much relying on the weather forecast for light winds, The ‘New Hope’ Ugandan orphanage helps to care for, paddling into a headwind is hard work,” he continued. and raise, orphaned children. It puts orphans into family groups with other youngsters to promote a sense of “The first day weather conditions were excellent and belonging where they learn, play and grow up together. progress was rapid, day two however was a different story of strong headwinds and progress slowing to a Every penny donated goes towards providing medical crawl. As soon as we stopped paddling we were blown and educational supplies, food and towards supporting backwards so there was absolutely no respite,” he said. nurses, teachers and doctors to continue their life- changing work. Many volunteers help out at ‘New Hope’ In light of the conditions completing the entire 135.5 who themselves are reliant on donations from family and miles in 48 hours was clearly not possible but friends, but with such widespread poverty their support is determined to complete as much as possible Sam and hard to sustain and is dwindling. David resorted to night paddling, the route lit by head torches. Despite the weather conditions, some impressive ‘New Hope’ will welcome any and all support to continue blisters and aching shoulder joints they covered an to provide for its present orphans and to be able to offer a impressive 80 miles reaching Caversham Bridge, Reading home and ‘family’ for greater numbers. and spending more than 30 hours paddling the canoe. Visit www.newhopeuganda.org for more details. 15
  16. 16. Latest success gallery Please find below a small selection of our recent deals. For a full listing of these please visit www.bcmscorporate.com/success-gallery BCMS Corporate Plantagenet House Kingsclere Newbury Berkshire RG20 4SW T: 01635 296191 F: 01635 299502 E: info@bcmscorporate.com www.bcmscorporate.com

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