The Spring '09 edition of BCMS Corporate's magazine iDEAL featuring market news, deal news from the UK and USA, case studies and related M&A information.

1. M &A NEWS FRO M B CM S CO R P OR AT E
M&A OR SP RI N G 2009
RI
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
SEEING OPPORTUNITIES AND
AVOIDING RISKS
www.bcmscorporate.com
INSIDE: FREE SERVICES CASE STUDIES M&A DOCUMENTS WARNING CLIENT INTERVIEW PROACTIVE MARKETING
PERSONAL FINANCIAL PLANNING M&A TERMINOLOGY INTERNATIONAL NEWS PHILANTHROPY DEAL COMPLETIONS

2. Free
services
If you are considering selling your business, either now or in the future, please
take advantage of the free services below.
A refreshingly different approach to selling
your business for its maximum value
David Rebbettes
2008 EDITION £49.99
Free half day Free business Free book
seminars evaluation If you would like to read more
about our refreshingly different
At these free half day seminars,
which attracted nearly 2,200
meetings approach to selling businesses
Free and confidential business for their maximum value please
business owners last year alone,
evaluation meetings offer you the download* a free version of our
we reveal how our refreshingly
opportunity to find out more book entitled ‘Selling your
different approach to selling a
about us and how we can assist business for its maximum value’.
business works and why this, as
you in achieving a maximised The book details the sale process
opposed to the traditional
sale price. The majority of all clients’ businesses are taken
methods, leads to a maximised
business owners choose to meet through, from preparation to a
sale price. A step-by-step guide
us at our head office near completed sale. Throughout the
takes attendees through our sale
Newbury, Berkshire or regional book, case studies cover actual
process, from preparing a
office in Haslingden, Lancashire examples of the mistakes made
company for sale, contacting
so that, in addition to discussing by business owners in the sale
potential acquirers and receiving
their requirements, they can also process. This book provides
offers through to price
view our offices and resources to essential information for owners
negotiation and sale completion.
fully understand how we support and shareholders of privately
A fascinating collection of case
our clients throughout the sale owned businesses, whether
studies provide many invaluable
process. However, our Business considering a sale now or simply
lessons. Each seminar provides
Managers are also able to visit planning for the future.
an essential insight into the many
you either at your offices or
pitfalls of the sale process and
another suitable location. Each Books can be downloaded at
the methods necessary to avoid
meeting typically lasts 90 www.bcmscorporate.com
them.
minutes, however the length of or call 01635 296191.
the meeting is dictated by the
To book onto a seminar time you feel you need.
visit www.bcmscorporate.com
or call 01635 296191. To arrange a meeting please call *Also available in hard copy
01635 296191.
2

3. i D E A L
“Welcome to the
spring issue of
iDEAL, I hope you
will enjoy reading
our modest
contribution to the
current economic
debate and climate
for business sales.
In this issue of i D E A L
Deal completions page 4-5 I’m pleased to say that the optimism I conveyed in the last
A selection of just some of the deals BCMS Corporate has issue of iDEAL was not misplaced. Our own internal
completed in the last quarter measures continue to point to a healthy smaller and
medium-sized acquisitions market. There has been a
noticeable upturn in buy-side and sell-side activity since
I can see clearly now page 6-7
the start of this year. This time last year we were receiving
Statistics reveal benefits expected by an acquirer are
an average of 4 unsolicited enquiries from prospective
often threatened by poor communication and planning
acquirers looking for ‘targets’ each month. This year
pre-deal, for the post-deal period. The BCMS Corporate
though, unsolicited enquiry levels have risen to 30 in
approach addresses such risks, whilst acting in its vendor
January, 79 in February and 65 in March. March also
clients’ best interests, it also helps acquirers to reach
recorded the second highest monthly number of
a much clearer understanding of deal benefits and how
negotiation meetings, in the 22 year history of BCMS,
to realise them.
Client interview – Visualsoft page 8 between our vendor clients and prospective purchasers.
In this issue there are some interesting observations on
David Cant, Managing Director of Visualsoft Limited
why the BCMS Corporate approach is not only good for
talks about his experience of selling his business.
Ask us page 9 sellers but also addresses some of the historical
Malcolm Murray, Senior Business Manager at BCMS weaknesses which threaten post-deal gains for acquirers.
Corporate answers a question about the proactive There is news on our expansion in China, USA and Europe,
selling approach to selling businesses. which continues to ‘buck the trend’ in the corporate
finance sector. Also featured, a selection of case-studies on
some of the deal completions of the last few months, and
Look East page 10-11
charitable work which the Company and some of our staff
Interest in China is high on the agenda of many dynamic,
are involved in.
growing businesses, BCMS Corporate is no exception
– here we outline our plans for expansion into China.
You can access free information about what motivates
buyers from our website or by attending one of our free
Managing personal wealth page 12-13
seminars held each week, more details on the adjacent
The Coutts approach to meeting the needs of
page. Finally, if you have any comments or questions
entrepreneurial clients
M&A terminology explained page 13 about this issue of iDEAL or any matter concerning
What is an Earn-Out and should you agree to one? business sales, please do not hesitate to get in touch.”
International news page 14
BCMS Corporate is in expansive mood
Philanthropy page 15
Charitable work by BCMS Corporate and staff
Brian Rebbettes - Chairman
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. BCMS Corporate• D e a l co m p l e t i o n s
BCMS Corporate takes lead
in sale of The Driving
Instructor Centre
BCMS Corporate has completed the £11.8 million sale
of The Driving Instructor Centre, the number one provider
of dual-control vehicles in the UK.
autonomous business. It is currently Adds Mark West, Director at The
in the process of rolling-out a Driving Instructor Centre: “Under new
nationwide network of dual-control Government reforms, the driving test
vehicle centres throughout 2009 as is becoming much tougher and
L
part of an ambitious plan for growth. learners will soon be required to take
aunched in the late 1980’s, The Says Luc Juffkins, BCMS Corporate around 50 lessons before they are
Driving Instructor Centre supplies Deal Leader: “We are absolutely allowed to sit their tests. Also, when
some 3,200 new and nearly new delighted to have found a buyer for unemployment grows, people who
contract hire and lease vehicles a year The Driving Instructor Centre. It is a have never driven before often decide
to a wide range of independent fantastic business, with huge to invest in driving lessons to improve
driving schools across the country. potential, and I am confident that its their job prospects. All these factors
BCMS Corporate managed the sale to new owners, Hitachi Capital Vehicle have led to greater demand for dual
car finance providers Hitachi Capital Solutions, will provide it with the control cars and we envisage that with
Vehicle Solutions. The Driving means necessary to continue to lead the support and financial backing of
Instructor Centre, which employs 50 the way in the supply of dual- our new owner, the business will
people, will continue to run as an controlled vehicles in the UK.” continue to expand.”
For deal summary see panel right
Saygrove set to soar after sale to Triumph
BCMS Corporate has completed the multi-million pound sale of Saygrove Defence
& Aerospace Group Ltd to US-based Triumph Aerospace Systems Group.
S aygrove, based in North Wales, designs and period of time. Although the economy is going through a
manufactures proprietary actuation and motor control tough time at the moment, BCMS Corporate continues to
systems for aerospace and defence applications and more buck the trend in the corporate finance sector. There is
recently have specialised in all electric solutions. still strong demand from acquirers for good companies;
our unique, proactive marketing approach to selling
BCMS Corporate, identified a significant number of
businesses enables us to locate buyers that might
potential acquirers and generated multiple offers for the
otherwise not be aware of the opportunity to acquire our
70-strong business from interested parties before agreeing
clients businesses.”
terms with Triumph Actuation and
Motion Control Systems-UK. For deal summary see panel right
Luc Juffkins, BCMS Corporate
Deal Leader commented: “We’re
absolutely delighted that
we have been able to complete
the sale of Saygrove to Triumph
in such a relatively short
4

5. BCMS Corporate• D e a l co m p l e tio n s
Deal summarys
Driving Instructor Centre:
Potential acquirers identified 269
Non-disclosure agreements
(NDA) signed 48
Qualified acquirer shortlist 6
1st and revised offers 9
Deal duration
from ‘live to market’ 13 months
BCMS Corporate given top Saygrove:
marks by leading electrical Potential acquirers identified
Non-disclosure agreements
136
(NDA) signed 24
testing specialists Qualified acquirer shortlist 9
1st and revised offers 14
BCMS Corporate has managed the sale of two of the Country’s Deal duration
leading electrical testing and inspection specialists – Beaumont from ‘live to market’ 11 months
Electrical and Powertest – in a multi-million pound deal. BCMS
Corporate has recently completed a total of six deals in this Beaumont and Powertest
sector alone including the sale of Precision Monitoring and Potential acquirers identified 251
Control Limited in December last year. Non-disclosure agreements
B
(NDA) signed 35
eaumont and Powertest Explains Bob Jones, BCMS Corporate
Qualified acquirer shortlist 7
approached BCMS Corporate to Deal Leader, “This was a highly 1st and revised offers 7
identify a single buyer for the Group, unusual transaction for BCMS
who between them employ more than Corporate involving not just the sale
Deal duration
200 people. of more than one company, but also a from ‘live to market’ 18 months
Based in Hull and Haywards Heath, foreign acquirer bound by foreign
Beaumont and Powertest provide a acquisition laws. We introduced ‘asb
range of accredited services to Law’ to our clients, Karen Lord,
Deal summary key
companies of all sizes. Members of corporate finance partner provided Potential acquirers identified: the number of prospects
the National Inspection Council for tremendous support throughout and identified by our in-house team of researchers through
Electrical Installation Contracting maintained deal momentum in the their initial desk research.
(NICEIC), services range from portable closing stages. This outcome is a
testament to our ability to manage
Non-disclosure agreements (NDA) signed: the number
appliance to electrical installation
testing. cross-border transactions.”
of NDA’s represents the number of potential acquirers
Adds Stephen Wrinch, Managing
which have indicated an interest in our client’s business
Significant interest was generated in
Director of Powertest: “We are
by requesting further information. Before this is given
the Group and Faceo FM (UK)
emerged as the strongest buyer over absolutely delighted to have
an ‘NDA’ is signed by them.
the course of meetings with various completed the sale of Beaumont and Qualified shortlist: the result of an exhaustive process
interested parties. Powertest to Faceo FM (UK), and undertaken by our project managers to ensure the most
would like to take this opportunity to
A complex deal, it involved
suitable potential acquirers are taken through to the
thank BCMS Corporate for their
extensive liaison with its parent
continued support throughout.”
latter stages of the deal.
company Faceo, the French-owned
For deal summary see panel right
1st and revised offers: the result of our work to ensure
global facilities management group. the post-deal benefits of the acquisition are clearly
understood by the acquirers.
Live to market: the point at which our specialist
Prospect Generation Team start to speak to potential
acquirers about an opportunity to acquire a client
company.
5

6. BCMS Corporate• M & A do c u m e n t s wa r n in g
I can see clearly now
Because of the vendor warranties and
indemnities contained in the ‘Sale and Purchase
Agreement‘ and subsequent ‘Disclosure Letter’,
some acquirers and their advisers are over reliant
on them as a replacement for a thorough
consideration of the merits of a deal.
A commonly held belief is that the
acquirer holds ‘all the cards’
when undertaking an acquisition,
however, statistics reveal that the
acquirer often ends up with rather
less, in terms of post-deal benefits,
than they ‘hoped’ for. Research by
Société Générale (SG)
(Source:Moneyweek) rather
depressingly reveals that just 30% of
acquisitions can be considered a
success, a staggering 70%, they found,
fail to deliver some or all of the
expected benefits – in the worst case
scenario the ‘wrong’ acquisition can
destroy value entirely. I’m sure the
Lloyds Banking Group board is rueing
the day it allowed itself to be
encouraged to acquire HBoS, the
result of this acquisition was a
massive destruction of value in what
was a relatively healthy Lloyds TSB.
Needless to say, the RBS acquisition of
ABN Amro is also a high profile
example of such value-destroying
deals.
6

7. BCMS Corporate• M & A do c u m e n t s war n in g
DRAWING CONCLUSIONS inception in 1987 yet remains unique; the unknowns and the second revised
What can we conclude from the SG a founding principle is that the upwards, driven by the clear business
findings? Interpretation of statistics is vendor must be transparent and has case we provide. Perhaps the most
a contentious issue but you might as much to gain from helping the dramatic example of this is where the
reasonably presume that many acquirer understand their business, bid spread was a remarkable £19.6
acquirers over pay for target its future potential and the post-deal million. The same acquirer submitted
companies. You could equally assert benefits, as the acquirer does. Our a first offer of £3 million for a
that vendor management teams fail to belief is that what is good for the company they eventually paid £22.6
disclose or understand material facts vendor is ultimately also good for the million for. Sceptics among you will
about their business which, when acquirer; they have many shared no doubt conclude that this might fall
discovered post-deal, have a objectives which traditional selling into the HBoS category of deals; in
catastrophic effect on the combined methods can overlook. ‘Deal-making’ fact, our clients agreed to an earn-out
business. This is almost certainly true all too often becomes an adversarial (see ‘Terminology Explained’ in this
of the HBoS deal, it would appear that process, often due to poor issue of iDeal, page 13) based on our
disclosure of the extent of the toxic communication and a mis-match of post-deal business plan. All the
debt was poor, or at least, was poorly expectations, yet we know from more projections were hit and our clients
understood, and if press reports are than twenty years experience, it is far received the maximum consideration.
to be believed, Lloyds TSB also went more likely to succeed through a co- Incidentally, a return on investment
ahead with the acquisition, allegedly operative and open approach. (ROI) price, based on historical
encouraged by Prime Minister Gordon Acquiring management teams which profits, would have been very close to
Brown, whilst relying on a remain detached from the process the original £3million offer which, as
significantly truncated due diligence and drive their deals almost it transpires, would have been a very
process. This raises another point exclusively through advisers are bad deal for our client and an
which might be deduced from the exposed to greater risk. exceptional deal for the acquirer –
statistics; that acquiring management what we achieved was a fair price.
Here at BCMS Corporate we seek to
teams fail to take the steps to fully
maximise the price for the vendor. Our view is that the vendor should
understand the business they were
This should not be confused with take responsibility for ensuring
buying and perhaps, gave insufficient
selling at a price which means the transparency and help the acquirer to
thought to how the two companies
acquirer overpays or is disadvantaged more easily identify and quantify the
might be integrated post-deal, to
– what we strive for and what we benefits and by so doing, create a
produce the intended benefits. The
achieve is a fair price for our clients genuine win-win. A poorly
issues of risk, price and value
and for the acquirer. This can only be considered acquisition at any
couldn’t possibly be accurately
achieved if we not only thoroughly price is almost always a bad
assessed with such an approach.
understand our clients and their one. A well reasoned,
Interestingly, there is another piece businesses but also recognise the considered acquisition
of research which bears a striking acquirers’ needs. We understand and arrived at through co-
correlation to the SG findings appreciate their need for clarity about operation and openness
mentioned above. KPMG what it is they are buying and its between vendor and
(Source:Moneyweek) undertook potential, so we set out a acquirer, will almost
research entirely independent of that ‘conservative’ [agreed by both parties] always lead to both
conducted by SG; it produced a very post-deal synergy plan, bespoke to parties achieving their
revealing statistic, just 30% of each acquirer, including a financial aims.
acquirers were found to undertake illustration of the cross-sell
opportunities, the growth prospects, You can read more on
any detailed assessment of tangible
cost savings and any other such this subject by requesting
synergies with the target company.
tangible gains. The acquirer can then, a book,
These might include, cross-sell
with much greater certainty, remove free-of-charge, written by
opportunities, cost savings, properly
some of the risk element from their Dave Rebbettes, one
considered forecasts for revenue and
price offer for our vendor clients of the founding directors
profit growth. It won’t have escaped
company. We do this for all short- of BCMS Corporate
your attention that this finding, 30%
listed acquirers to be able to identify from our website
of acquirers who undertake detailed
the best match-up, an acquirer where www.bcmscorporate.com.
pre-deal assessment, matches exactly
the 30% of acquisitions which the gains are most significant.
actually succeed.
PRICE AND UNKNOWNS
A BALANCED APPROACH This approach often generates a
The BCMS Corporate approach to dramatic uplift between first and
selling businesses has remained second offers from each acquirer, the
unchanged since the Company’s first offer heavily weighed down by
7

8. BCMS Corporate•Client interview
A view to the future
Managing Director David Cant
of Visualsoft Limited, a leading
supplier of digital video
systems to the offshore survey
and inspection industry, talks to
iDEAL about the reasons for
selling his business and how
the sale progressed to a
successful conclusion.
W hy did you decide to sell your
business?
‘We felt that we were hitting the top
of a cycle and without getting some
outside stimulus the business would ‘Reasonably important, but eventually
start to decline. We also thought that the story can get out, it’s not such a
our profits were peaking and it would big issue.’
be a good time to sell.’
How much did the sale process affect
How did you find out about BCMS the everyday management of your
Corporate and why did you select us company, if at all?
to sell your business?
‘It wasn’t a problem at all, not until
‘The first thing I got was a mailshot the deal price and terms were Would you recommend BCMS
through the post giving information completed and then we got into due Corporate’s services to another
about a seminar. The reason I diligence which was a headache.’ company that is considering selling?
selected BCMS Corporate is because I ‘Yes I would.’
Are your staff staying with the
liked the approach with regard to
company and was this an important Do you believe that you sold your
targets and, as they have a massive
factor is the sale process, if so why? company for maximum value?
database, I felt that they could offer a
lot of contacts, whereas others I ‘Yes, the staff stayed, and it was an ‘Yes, you will never know 100% if the
approached did not have the important factor.’ acquirer would have paid more but I
resources.’ Will you have any involvement in the think it was a good deal for us. I don’t
business post sale and if not what are think we would have got more from
How did you feel the sale process was
your plans for the future? another buyer though.’
managed?
‘I’ve agreed to a two year earn-out What is your overall opinion of BCMS
‘I feel it was managed very well, no
period so I am contractually obliged Corporate?
problems at all.’
to stay for two years. I haven’t ‘I think the service they provide is
How important was confidentiality
decided yet what I am going to do excellent and the concept of what
and why was this?
after that period.’ they do is also an excellent idea too.
The way they go about it is very
thorough.’
8

9. BCMS Corporate•Questions answered
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 clients. In this edition Malcolm
Murray, Senior Business Manager explains, in the context of selling a business, why
proactive marketing is important.
Q : You talk about ‘proactive’ marketing, what exactly does this translate to
and how does it compare with other business sales approaches?
A To understand what we company sales reach a successful
:
mean when we talk about conclusion using this approach.
proactive marketing, you need only The BCMS Corporate proactive
look at how you market and sell your marketing approach cuts right across
own products and services. No doubt the passive methodology employed by
you tailor your marketing literature others. Most owners of private
and sales approach to best promote companies, in our experience,
the features and benefits which your recognise that they will only achieve
products and services provide to the best price and acceptable terms, if
users. You define your market and they are dealing with the most
through an appropriate sales and appropriate acquirer. The objective of
marketing mix whether telesales, our thorough, proactive marketing is
advertising, sponsorships, to simply locate the best purchaser in
conferences and exhibitions for the first place. It is only after this that
example, you undertake deliberate the focus needs to shift to the
actions to generate enquiries and technicalities of the sale. Furthermore,
achieve the desired result – to attract, finding the right buyer can have a
sell to and retain customers. The profound effect on the speed and ease
exact same sales and marketing of negotiations.
techniques used to sell any product
Selling a private company is
or service successfully, we believe,
fundamentally not an accounting or
must also be applied to selling a
legal matter, these do support the
company. We deploy appropriate techniques to generate
process but, first and foremost, it is a sales and marketing
appropriate enquiries. Traditional methods of selling
matter. Changes in traditional thinking are certainly
businesses are typically very passive. A regular anecdote
required – absence of success using traditional methods
our clients share with us when they meet us for the first
makes that argument loud and clear.
time is to describe their experience of investigating how
to go about selling their businesses. Invariably they will To give you some sense of scale, ‘proactive’ in the BCMS
have raised the subject with their accountant and some Corporate sense means that via our own dedicated research
will also have spoken to brokers and other corporate team, which has access to our own unique database of
finance advisers. The ‘advice’ they receive ranges from acquirers and the best third party data, we initially identify
“Who do you think might buy your business?” and then an average of 230 prospective acquirers for each client
being asked to compile their own list of potential company we take to market. We then speak with each one
acquirers, to “We know who the buyers are”. In every to qualify them and identify those with the most
case, the advice is limited by the capacity or willingness compelling strategic fit before meeting with the most
to undertake the exhaustive sales and marketing that is suitable. By this stage we will have reduced the ‘pool’ to
necessary to achieve the best possible result. This lack of between 3 – 6 prospective acquirers.
effort to market a business at the front-end of the There is absolutely no short cut to getting to this point if
transaction means businesses either don’t sell or sell at a business is to sell and sell at a price that truly reflects the
prices well below their true value. What advisers are often value. The initial search for the acquirer has to be
more equipped to do is handle the technicalities of the comprehensive and the qualification meticulous and
sale. Small wonder that less than eight percent of uncompromising.
9

10. BCMS Corporate• E x p a n d i n g in t o Ch i n a
Look East
Without doubt, politically and economically, China will continue to grow in importance, a day rarely
passes now where China doesn’t feature in news and business section headlines,
T
but how can companies develop opportunities in China?
he attention being paid to China all, or a proportion of their OPPORTUNITY KNOCKS
is unsurprising. China is still companies, as we provide It may be that you are already active
predicting its economy will grow by to our clients in the UK, USA, Sweden, in China, either through an existing
up to 8% this year: it has a vast Turkey and Chile. For those unfamiliar wholly-owned business, through a
surplus accrued over the last six or with our approach, we represent joint venture arrangement, or you
seven years, generated by the credit- vendors and assist them in taking may be outsourcing manufacturing or
fuelled consumption and property their businesses to market, locate the other aspects of your business to
‘bubble’ that has been prevalent in most suitable potential acquirers and, drive down costs and remain
the Western nations, which means it negotiate a price which fully reflects competitive – in which case you will
can finance its own fiscal stimulus the value of the business (for more know how rewarding a Chinese
from reserves as necessary. It is a detail on the BCMS approach go to business partner can be. For many of
main provider of purchasing power www.bcmscorporate.com and also see you though, this may in fact be a
[government debt] to the ‘West’, the article “I Can See Clearly Now” in completely new venture and as such,
added to which, China has a vast this issue). some further investigation beyond
home market of almost 1.4 billion consideration of acquisition or
people, offering enormous latent investment opportunities will be
FROM ACORNS
growth potential. One carefully Our clients tend to be in the needed. Useful contacts are UK Trade
targeted recent stimulus, caused an £1million to £75million turnover and Investment (UKTI) and the China-
instant 25% increase in new car range and in China our focus will be Britain Business Council (CBBC), they
registrations for example. no different. Much of the cross-border tend to work together very closely
merger and acquisition activity in and both have a depth and breadth of
DEAL SOURCING MADE EASY China to date has been focused on expertise for existing or new entrants
China is not just an investment macro-deals but, the country is now to the Chinese market. Trade missions
destination for larger firms but very aware of the vital role its small are run frequently between the two
represents a significant opportunity and medium enterprises (SMEs) are countries but are unlikely to result in
for smaller and medium sized playing, and will continue to play in finding the right strategic
companies that are sufficiently future. In the most recent survey opportunity at the first attempt. As a
flexible and entrepreneurial. Any carried out in October 2006, findings means of experiencing China for the
company with growth aspirations and revealed that there are more than 4.3 first time though, they can be useful.
a good quality management team million SME companies in China. They
would be wise to at least consider contribute 58.5% of GDP, 50.2% of The BCMS Corporate service is not
what China has to offer. taxation, account for 75% of affiliated in any way but will be
employment, 66% of patents and 82% complementary to support, advice
Deal sourcing (joint ventures, of new products of the country. This and practical assistance available
acquisitions, investments) in China is impressive resource is packed with through UKTI and CBBC. Once you
notoriously difficult with company opportunity and will undoubtedly be have decided continued or new
information either unreliable, not in the breeding ground for some of the expansion into China is right for you
the public domain or spread across global brands in the near future. Some and that an acquisition or investment
hundreds of sources in a variety of Chinese SME’s will grow to become is a likely part of that process, BCMS
formats. As in more developed M&A some of the dominant players in their Corporate will be uniquely placed to
economies, but to a greater extent in home market. Entrepreneurial identify relevant target companies
China, even established private and activity and innovation is now very from our soon to be launched
institutional investors/acquirers find much part of Chinese business culture. proprietary deal-flow ‘intelligence’
identifying the right target companies service. During a recent visit to China,
to be ‘heavy going’. That though is BCMS Corporate directors negotiated
about to change, BCMS Corporate and signed important and exclusive
opens in China shortly to provide co-operation agreements with ‘Equity
Chinese business owners with exactly Exchanges’, a national association for
the same unique approach to selling SME’s, Economic Development
Agencies and key trade bodies.
10

11. BCMS Corporate• E x p a n d i n g in t o Ch i n a
These agreements will ensure the
smooth roll-out of BCMS Corporate
(China) and will add to our own
intelligence gathering service through
exclusive and privileged access to
many of the best business sale and
investment opportunities in China.
MUCH IN COMMON
The Chinese are generous hosts and
anyone travelling to China is assured
of a warm welcome. There is, in our
experience, a very good affinity
between the British and the Chinese.
Their way of doing business naturally
lends itself to the more respectful,
considered and patient approach that
largely typifies the British way. This is
not to be confused with indecision. If
you have done your research and you
clearly have something relevant to
talk about, first meetings can move
very quickly into meaningful and fast
moving negotiations.
The Chinese also have a particular
regard for the British, our history and
the achievements of what is, after all,
a small island nation comprising less
than 5% of the population of China.
The language barrier is a factor but
the number of English speakers is
increasing rapidly. There is a
significant emphasis on teaching
English in schools and there are many
Chinese graduates, educated in the
West, who have returned home, who
understand both Western and Eastern
cultures. Engaging a good interpreter
or recruiting English speaking staff is
therefore not particularly difficult.
In times of economic uncertainty,
those companies that take practical,
decisive steps to enlarge their
marketing skills and embrace new
business opportunities around the
world will find that it is still possible
to thrive. China represents just such
an opportunity and for some it will
present itself as a golden opportunity
to excel.
To discover more abou t o ur
pl a n s f or C hi n a, pl ea s e cont ac t
e ither Steve Re bbe ttes,
Operations Director or And y
H unt, Str a teg ic D e ve l opmen t
M an a ger on 01 635 2 996 16.
11

12. BCMS Corporate• F i n a n c i a l p la n n i n g
A Tailored Approach
The management of personal wealth is, for the individuals
concerned, a unique experience. However, something shared by
many entrepreneurs is that with so much of their time devoted to
their businesses, dedicating time to their own personal finances is
a rare opportunity.
F urthermore, a high proportion of focusing on the entrepreneur’s
their personal wealth is often specific requirements. Today, Coutts
locked within their own business; can count almost one third, or
apart from their home, personal 20,000, of its UK clients as
assets consist almost exclusively of entrepreneurs - with a client base
shares in their own company and spanning the entire spectrum of “Entrepreneurs’ Relief.” If you
owners are loath to invest in anything British industry. Coutts’ tailored qualify for this, you can claim that
other than their own stock. They find approach to managing their wealth you should pay CGT on only 5/9 of
it difficult to focus on estate planning helps clients to build up their the first £1m of gain that you make.
or protection issues, or whether tax businesses, supports serial In practice, this means that you pay
can be saved, when there are entrepreneurs in the buying and tax at 10% on the first £1m gain.
customers to be won and work to be selling of businesses, whilst taking
Entrepreneurs who are considering
done in their business. good care of their private financial
selling their businesses are well
requirements.
Entrepreneurs require a tailored and advised to seek advice early, to
Deciding on the crucial moment to ensure that their tax position is
integrated service for their extremely
sell all or part of a business is one of optimised. For example, if
sophisticated financial needs. They
the toughest decisions an entrepreneurs’ relief is applicable,
need the expertise of a dedicated
entrepreneur can face. A whole range then a gift of shares in the company
private banker who will have an in-
of dilemmas can come to the fore, to a spouse may in some
depth understanding of their short,
from market timing to minimising the circumstances result in both being
medium and long-term requirements.
tax liabilities that can arise. able to claim the relief and thus pay
We often find that entrepreneurs
have insufficient capital set aside to Between 1998 and 2008 the Capital tax at 10% on £2m. Keeping all of
provide for long-term personal Gains tax regime included taper relief your eggs in one basket is probably
lifetime requirements, which may which meant that many people selling not the best way of protecting your
include retirement planning and small businesses or company shares future financial wealth. Diversifying
schooling fees, for example. And in were taxed at only 10% on any gain wealth is important in managing
many cases, particularly those they made. The last Budget changed personal risk and avoids relying
looking to expand their operations, this system completely. When an solely on the performance of one
they also need immediate access to individual sells a business, there is no company, even one’s own, for a
liquid funds and this requires access longer any indexation or taper relief. comfortable retirement. That is why it
to a range of flexible lending products Instead, tax is charged at 18% on the is vital for a private banker to raise
offering reserve lines of credit for difference between the original awareness amongst owners and
stand-by use allowing them to borrow capital investment, which is often entrepreneurs that their business is
funds without being tied into rigid negligible, and sale proceeds, with an only one piece, albeit a large piece, of
repayment structures. allowance for the costs incurred in a larger picture. By neglecting their
purchase and sale. wider wealth management, they can
Recognising this and many of the
After many protests from inadvertently be taking more risk
other wealth management needs of
entrepreneurs that the effective rate than necessary.
this group, in 1999 Coutts & Co
became the first private bank to of CGT charged on those selling small Many entrepreneurs are suspicious
establish a dedicated team of advisers businesses had risen from 10% to of pension planning, preferring to see
18%, the government brought in an their business as their pension.
12

13. BCMS Corporate• F i n a n c i a l p la n n in g
Whilst this is often a justifiable its clients an Estate Planning and By Perry Littleboy, Senior Client
attitude, it is also important to Wills service to ensure that, in the Partner at Coutts & Co.
consider the tax and diversification case of a death, assets pass in the way
advantages that a pension can bring. that they would want and with no
For more information about becoming
In the last resort, pensions are usually unnecessary Inheritance Tax.
a Coutts client, contact
kept completely separate from an Advice on financial planning alan.dye@coutts.com; call 0207 753
individual’s other assets, which means decisions is only one aspect of the 1427 or visit
that in the event of a business failure, integrated services which Coutts www.coutts.com/entrepreneurs
they are normally not affected. offers its entrepreneurial clients.
Similarly, most entrepreneurs do not Clients won’t ask us to act for them,
give much attention to the impact of manage their money, find a mortgage
Inheritance Tax (IHT) on their estates, or plan their pension unless they
expecting that the value of their have absolute confidence in us. Being
business will not be subject to IHT busy means they have to delegate
because of the exemption given by responsibility to a trusted adviser,
Business Property Relief. Coutts offers and that, essentially, is what we are.
BCMS Corporate• T e r m i n o l o g y ex p l a i n e d
What is an Earn-Out and
should you agree to one?
A n earn-out simply refers to the proportion of the total price an acquirer
proposes to pay for a company which is subject to the meeting of certain
pre-determined financial targets in an agreed time frame, post-deal.
BCMS Corporate, on the sale of our clients’ businesses, seeks to maximise the
sale price.
We achieve a choice of buyers for our clients – across the range of bids for a
client company it is not unusual for one or two acquirers to include a
suggested earn-out as part of their offer. It is then possible for our clients to
decide whether the offers which include an earn-out are the most attractive.
An offer including earn-out can prove attractive particularly where the
business owner is staying with the business and can therefore continue to
influence performance, or where the immediate consideration already
exceeds vendor expectations. An earn-out also lessens the perceived risk for
an acquirer. A vendor who agrees to an earn-out should be confident that the
business will perform to expectations and be willing to risk the deferred
proportion of the price should targets not be met.
There are though, a number of considerations which must be taken into
account and resolved to avoid future disagreements should an earn-out be
agreed, these include:
• An agreed method for calculating profits post-deal
• A clear policy on how costs will be allocated by the acquirer in the
enlarged group
• Reassurance over the ability of the acquirer to make the agreed payments,
possibly with security over assets, shares or by money held in ‘escrow’ in a
secure account
• Tax efficiency
Earn-outs can be a very effective mechanism for maximising sale price but
due consideration must be paid to the advantages and disadvantages in
each case.
13

14. BCMS Corporate• I n t e r n a t i o n a l
International
news
Our international offices continue to do well
and expansion is very much on the agenda.
E D
Turkey North America
xpansion is continuing apace from espite the negative economic
our Turkish office, pioneered by news coming out of the USA, the
Mehmet Soyer who heads up BCMS demand for BCMS Corporate’s
Corporate operations in Turkey. He is services is still gathering pace. We
now taking the BCMS business sales have now opened our office in Fort
approach into Romania and Bulgaria. Worth, Texas, adding to our first
Mehmet has appointed business office opened just 18 months ago in
partners in Bucharest and will oversee Manhattan. Deal origination is
the roll-out of our seminars across already ahead of projections in Texas,
B
Romania, commencing May 2009,
with our first event in Bucharest.
so much so, that a further office will
open in Colorado in the Autumn. We
China
CMS Corporate will shortly
are now running our popular
Not one to ‘rest on his laurels’, commence operations in China.
seminars across the USA and into
Mehmet has also just completed our Directors have already made visits to
Canada.
first seminar in Bulgaria in Beijing during which several co-
conjunction with the Bulgarian operation agreements were signed
Chamber of Commerce and Industry with equity exchanges, trade
(BCCI). The seminar attracted some associations, SME associations and
46 business men and women and, economic development agencies. We
being the first of a planned series of will be providing the 4.5 million
events in Bulgaria, 4 journalists also SME’s in China with access to the
attended. same unique business sales approach
which is delivering such effective and
In keeping with the theme of
consistent results for our clients in
partnerships, Mehmet has also signed
the UK, USA, Scandinavia, South
a co-operation agreement with the
America and the Mediterranean. For
Bulgarian Industrial Association (BIA)
further information regarding our
and he will be delivering a seminar to
operations in China please turn to
members of the BIA in April 2009.
page 10.
B
Scandinavia
uilding on the achievements of
our offices in Sweden and Norway,
BCMS Corporate has now opened an
office in Denmark – this will be lead
¨
by Peter Lowegren. A schedule of our
unique, free-seminars for business
owners on how they can maximise the
value of their businesses when they
wish to sell, is already in place, with
the first to be held in Copenhagen on
June 18th.
14

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
B
Corporate as a company also participates in. Power Walk
CMS Corporate project manager Clare Power has
completed what, at times, was a gruelling 120
kilometre trek along the Great Wall of China raising more
than £2,500 for St John’s Ambulance.
Clare explained, “I’m really pleased to have raised so
much for St John’s Ambulance. I travelled alone to Beijing
where I met up with other volunteers – we then tackled
the trek as a group. The scenery was beautiful but in parts
my attention was totally focused on the Wall which was
impossibly steep and crumbling in places, these parts
were physically exhausting and a little scary but
T
BCMS Corporate extends its work in India successfully completing the challenge gives me a great
sense of achievement.”
he “Poor and Needy Benefit Trust”, the charitable trust
established by the directors of BCMS Corporate, has
B
once again had a busy quarter. Each year a director of Basingstoke RFU
BCMS Corporate visits the projects to ensure that the CMS Corporate has sponsored Basingstoke Rugby
money donated via the Trust is well targeted and that Football Club under 15s team for next season. The
future needs are taken into account. This year Steve sponsorship will allow each player to have their own
Rebbettes travelled to Kakinada spending time at the water-proof training suit. Players come from a wide range
School built by the Trust. of backgrounds and for years the team has relied on kit
The School provides an education for 370 children from handed down to them from the age group above. The
poor homes at any one time and has subsequently been team will now be able to turn out uniformly for training
extended to incorporate permanent accommodation for 50 and matches and is properly equipped for all weathers.
orphans and 25 widows. Basingstoke RFC has itself chosen Naomi House Trust as
Steve Rebbettes said, “We regard it as a real privilege to their adopted charity for this year and will be engaged in
be able to help the children, widows, their carers and various fund-raising activities on behalf of the Trust.
teachers in India; visiting India on a regular basis reminds Based near Winchester and founded in 1997, the Trust
us how fortunate we are and redoubles our efforts to do runs a children’s hospice providing care for local,
more charitable work both in India and at home. I was terminally ill children.
accompanied this year by my eldest daughter who found
the experience very rewarding.” He added, “We have
extended the work of the Trust which is also now
sponsoring an on-going self-help village project in
Northern India – the aim is to support the villagers in
developing effective farming of livestock and crops with a
view to self-sufficiency.”
Other notable activities of the Trust include funding
knee surgery for one lady whose mobility was seriously
impaired; paying for radiation treatment to treat a
cancerous condition; covering the hospital costs of a little
girl seriously injured in a road accident and paying for
surgery for a teacher at the School to correct a ‘hole in the
heart’.
15

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