http://www.insider.co.uk March 2020 INSIDER 67
IN FOCUS
Chris Thompson
Senior Manager,
Corporate Finance
Anderson Anderson &
Brown
E: [email protected]
aab.ukKey areas to consider before
selling your business
Selling a business is a topic of much debate
and discussion but, despite this, planning
usually only crystallises when an approach is
made, market factors change or the owners
have a shift in their life objectives.
‘Prior planning and preparation prevents
poor performance.’ We all know this is an
old cliché but, in the context of selling a
business, it is true far more often than not.
The most effective action a seller can take to
achieve the best possible deal, is to prepare
both themselves and the business before
entering into negotiations with a potential
purchaser, taking actions such as:
t$BSFGVMUBYQMBOOJOH
XIJDIJTDIBMMFOHJOH
to do immediately before or during a sale
process so consider options in advance
to increase after-tax sales proceeds. New
Entrepreneurs’ Relief rules could significantly
impact tax savings.
t%PJOHBmOBODJBMAIFBMUIDIFDLPOBOZLFZ
risk areas before a due diligence process.
Industry and tax compliance are key areas of
focus for any potential purchaser.
t3FEVDJOHEFQFOEFODZPOUIFPXOFSCZ
having a robust management team in place
can result in a more valuable business to
the purchaser and shorten the required
handover period post-sale.
t1VUUJOHFõFDUJWFNBOBHFNFOUBDDPVOUJOH
and Key Performance Indicator (KPI)
reporting in place to give the vendor and
the purchaser timely visibility of current
performance.
t3FWJFXJOHUIFNJYBOEDPODFOUSBUJPOPG
your business on particular customers and
TFDUPST%JWFSTJmDBUJPOXJMMNPSFUIBOMJLFMZ
make the business less risky, and more
valuable, to a potential purchaser.
These are a few of the common areas
we regularly discuss with business owners
and encourage them to consider. Investing
time well in advance of looking to sell a
business can increase the value and after-tax
proceeds, reduce the handover period for
the vendor post-sale, and, importantly,
facilitate an efficient and effective
sales process.Distillery. The assets acquired cover
distillation, warehousing and bottling.
Aberdeen engineering business
Balmoral Group invested a six-figure
sum in fire safety protection firm Blaze
Manufacturing Solutions, taking a 70 per
cent stake in the Aberdeenshire company.
Tom Faichnie and Melanie Clark of
Dow Schofield Watts Aberdeen provided
financial due diligence for Balmoral
Group. Balmoral raised its shareholding
in another Aberdeenshire company, ACE
Winches, during the period.
The number of reported buyout deals
completed in Scotland during the quarter
rose by more than 60 per cent to 21,
including an MBO at Prestwick Airport-
based Precision Tooling & Castings,
backed by £4.5m of Barlcays funding.
Employee buyouts included a deal
which saw nine staff at Grangemouth-
based IT support provider Exmos acquire
a stake in the business. “I didn’t want to
sell to a larger competitor that was more
interested in our intellectual property
and customer base than the growth of
the business and the security of the staff,”
founder Gordon Coulter explains.
Investment deals during the final
quarter included one which saw LDC,
the private equity arm of Lloyds Banking
Group, complete an investment in
Commsworld, the Edinburgh-based
telecoms and internet provider chaired by
SNP MP Ian Blackford.
Ricky Nicol, CEO at Commsworld,
says the shareholders had options for
investment, but had a strong relationship
with LDC “who share our vision for the
business”. LDC was advised by a team
from the Edinburgh offices of EY and
Pinsent Masons. The Commsworld
management team was advised by an
Addleshaw Goddard team led by David
Kirchin, along with Oakley Advisory.
Banking deals included East Kilbride-
based pharmaceutical wholesaler Target
Healthcare Group securing a seven-figure
funding package from HSBC to boost its
domestic and international business and
increase staff. Macdonald Henderson
advised Target on the deal.
Scotland’s biggest community-
owned windfarm also secured a £8.5m
refinancing deal from Lombard and the
Royal Bank of Scotland. The 6.9MW
windfarm on the South Uist estate and
owned by Stòras Uibhist provides an
income for the communities of Eriskay,
South Uist and parts of Benbecula.
The biggest funding deals of the period
including a £9m Series A round for AI-
powered patient management platform
developer Current Health (formerly
Snap40). The investment was led by MMC
Ventures with Legal & General coming
on board as the Edinburgh firm’s first
corporate investor and the largest investor
in the round. Par Equity and the Scottish
Investment Bank also participated.
Elsewhere in healthcare, Invizius, the
University of Edinburgh spin-out whose
technology could help reduce high death
rates amongst dialysis patients, raised
£2.75m from a consortium of investors.
The funding round was led by Mercia
and included Downing Ventures, the
University’s Old College Capital fund and
the Scottish Investment Bank.
In the tech sector, ecommerce analytics
firm e.fundamentals secured £5.3m to
drive international expansion. The funding
round was led by private equity house
Maven Capital Partners and supported by
investment partners Downing Ventures
and Scottish Enterprise.
Waracle, one of the UK’s largest mobile
app and digital products developers,
received a £4.8m investment from BGF
to support its long-term growth plans.
Founded in Dundee in 2007, the business
now has 140 people in offices in Dundee,
Edinburgh and Glasgow, and has recently
strengthened its London office.
The period also saw a clutch of
crowdfunding deals. Glasgow-based
recruitment technology firm Candidate.
ID secured a six-figure investment will
be used to accelerate its AI capabilities.
Investors included former RBS global HR
director Neil Roden.
Brewer Innis & Gunn also saw its
crowdfunding campaign to build the
largest major brewery in Edinburgh
for over 150 years pass the £2m mark.
Another Scottish craft beer brewery,
WooHa Brewing Company, surpassed its
£600,000 crowdfunding target in 19 days
to secure international expansion plans.
Robotical, the Edinburgh-based edtech
start-up behind Marty the robot which
aims to inspire children to take up careers
in STEM fields, raised more than £43,000
from a campaign on Kickstarter.
Among the larger funding deals
in the energy services sector, well
decommissioning company Well-Safe
Solutions secured a £66m investment.
MW&L Capital Partners led the new
round of investment, bringing together a
consortium of private investors. Funding
from Scottish Enterprise boosted the
initial funding provided by the major
shareholders.
In an encouraging indicator of levels of
confidence in the economic environment,
the number of start-up deals in Scotland
rose by 20 per cent during the quarter.
Start-up funding deals included
Dundee tech firm Snappy Shopper which
raised a seven-figure sum in seed capital
from Kelvin Capital, Mercia, the ScottishQ4 DEALS: OVERVIEW