In January we announced that SKS Business Services and sister Business Advisory firm SKSi joined forces with Primary Finance Group (PFG) to create a one-stop approach for growth companies or companies consolidating as a result of the pandemic. Clients are already accessing the strategic planning and cost benefits this approach is delivering by bringing together our accounting, corporate structuring and funding experience.
The importance of being able to access the most appropriate business finance and professional accountancy advice has never been more crucial for companies. The outlook for the UK and global economy appears increasingly uncertain, especially given potential implications of the conflict in the Ukraine. Higher commodity and energy costs, coupled with knock on price increases throughout supply chains, is fuelling inflation and risks slower growth. Current and forecast interest rate rises, plus an increase in personal and company tax rates will also bring pressure to households and businesses.
Despite the emerging economic challenges of 2022, UK mergers and acquisitions activity remains strong, many businesses are continuing to grow, while some are finding themselves facing increasing problems.
We’ve highlighted three common situations we are seeing below. If these relate to you then contact us for a confidential discussion to explore how we might assist:
- Mergers & Acquisitions – Management Buyouts & Management Buy in’s
- Growth Finance: the right finance structure and right funders
- Restructuring & Turnaround including Prepacks and CVA’s: complete lifecycle expertise
SKS Business Services offer a complete accounting, finance function outsourcing and advisory service. Our relationship with Primary Finance Group (PFG) enables client to access a range of finance options for business development, mergers & acquisitions, plus debt refinancing, all supported by the expertise of SKSi.
Mergers & Acquisitions – Management Buyouts & Management Buy in’s
- Access to the right debt finance is frequently critical to making a deal happen.
- How the finance is structured to meet the immediate and longer-term needs of the business is also crucial.
- Alignment across the key stakeholders and introducing the best fit funder relationship is key – matching with the right finance partner is extremely important.
- There are often several routes to exit and an array of facility types – security and pricing can vary dramatically depending on the situation.
- Management buy-outs (MBOs) are a frequent way for outgoing shareholders to maintain strong continuity for the business, something lenders draw comfort from.
- Conversely, management buy-ins (MBIs) are usually regarded as of higher risk – usually a cash investment is required from the incoming management team to underpin their commitment.
- Trade buyers and Private Equity often seek swift deal execution to reduce competitive tension – debt finance can be an effective tool to support this.
- The UK market is quite liquid currently through a broad mix of asset backed lenders, cashflow lenders and the ever-growing mix of debt funds.
- PFG maintains close relationships across the debt market, including at both senior management and Board level, often providing direct access to the lender’s credit function and other key decision makers.
- SKS provides the full Corporate Finance service including company valuations to guide clients through this process.
- Post pandemic, clients are working to re-energise their supply chains, but in many situations these are now more extended than before with a higher cash commitment being required for stock and ordered goods.
- Other uncertainties, given an increasingly uncertain economic outlook, are also impacting on costs and business models.
- Securing suitable finance for growth can often be a challenge – access to sufficient working capital is critical for any business, especially a growing one.
- Whether it’s capex to expand production capacity and capability, or an investment in people, systems and processes, access to sufficient cash ensures the confidence to commit.
- What if a large contract/order is just around the corner, does the business have the resource and cashflow fire power to meet the obligations?
- If that large order is from a foreign buyer, or requires pre-manufacturing deposits and pre-shipment funding, how is all this to be paid for?
- Does the business feel exposed to commit to such an order without sufficient liquidity and protection against the possibility of buyer default?
- PFG has extensive reach into debt providers offering finance against hard and soft assets, along with purchase order and contract funding, plus other working capital solutions.
- SKS provides comprehensive but affordable modelling for funding as well as management accounts and cash flow forecasting to support management and the funding process.
Restructuring & Turnaround including Prepacks and CVA’s
SKSi are experts in advising companies on the most effective strategy for dealing with a challenging financial situation. We recognise the pressures that Covid 19 has caused for many businesses, exacerbated in many cases by other emerging economic challenges:
- When any business is experiencing a period of financial instability, building and implementing a viable turnaround is vital for the future for the company – this plan is also essential to secure credibility and the support of debt funders which have a preparedness to lend into such situations.
- Nobody has a crystal ball, but with sound assumptions based on previous trading figures and a sensible set of projections that have been “tested“ by SKSi, there are a variety of lenders keen to support.
- Historically, this is where we see the balance sheet assets come very much into play, namely the receivables, and fixed assets including P&M and property.
- Other assets such as the inventory, soft assets and intellectual property tend to play a lesser part, but mustn’t be discounted as may form a crucial part of the business.
- In challenging situations like these, the responsibility lies with the Directors and/or shareholders to drive necessary change, and win the support of the lender.
- PFG and SKSi would work together and alongside each key stakeholder to achieve the best possible outcome for all parties.
SKSi (a part of the SKS Group) is a specialist business advisory firm offering Mediation for Business, Business Recovery, Business Restructuring, liaison with Creditors & Investors and Personal Insolvency.
Primary Finance Group is an independent arranger of debt finance solutions for businesses ranging from SMEs to large corporate organisations. PFG works with companies across most sectors and with a variety of requirements. This includes for those seeking to enhance cashflow, build and grow their business, plus via acquisition/management buy-ins or management buy-outs. The team is also highly experienced in working in turnaround situations including prepacks and CVAs. PFG are an Asset Based Lending and company debt finance specialist. We are extremely pleased to have this close working relationship with Primary Finance Group. SKS also works with other finance specialists as part of our overall client focused approach to ensure delivery of the best finance solutions we can collectively identify.