IS THE CREDITCRUNCH BAD NEWS

FOR COMPANYSALES?

M&A NEWS FROM BCMS CORPORATE WINTER 2008

FREE SERVICES DEAL COMPLETIONSVALUATION DEAL HIGHLIGHTS INSIDE DEALSM&ATERMINOLOGYYOUR TAX WEALTH MANAGEMENT CASE STUDIES FINANCIAL PLANNINGCLIENT INTERVIEWS INTERNATIONAL NEWS PHILANTHROPY

INSIDE>

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

David Rebbettes

A refreshingly different approach to sellingyour business for its maximum value

2008 EDITION £49.99

Free bookIf you would like to read moreabout our refreshingly differentapproach to selling businessesfor their maximum value pleasedownload* a free version of ourbook entitled ‘Selling youbusiness for its maximum value’.The book details the sale processall clients’ businesses are takenthrough, from preparation to acompleted sale. Throughout thebook, case studies cover actualexamples of the mistakes madeby business owners in the saleprocess. This book providesessential information for ownersand shareholders of privatelyowned businesses, whetherconsidering a sale now or simplyplanning for the future.

Books can be downloaded atwww.bcmscorporate.comor call 01635 296191.

*Also available in hard copy

Free businessevaluationmeetingsFree and confidential businessevaluation meetings offer you theopportunity to find out moreabout us and how we can assistyou in achieving a maximisedsale price. The majority ofbusiness owners choose to meetus at our head office nearNewbury, Berkshire so that, inaddition to discussing theirrequirements, they can also viewour offices and resources to fullyunderstand how we support ourclients throughout the saleprocess. However, our BusinessManagers are also able to visityou either at your offices oranother suitable location. Eachmeeting typically lasts 90minutes, however the length ofthe meeting is dictated by thetime you feel you need.

To arrange a meeting please call01635 296191.

Free half dayseminarsAt these free half day seminars,which attracted nearly 2,200business owners last year alone,we reveal how our refreshinglydifferent approach to selling abusiness works and why this, asopposed to the traditionalmethods, leads to a maximisedsale price. A step-by-step guidetakes attendees through our saleprocess, from preparing acompany for sale, contactingpotential acquirers and receivingoffers through to pricenegotiation and sale completion.A fascinating collection of casestudies provide many invaluablelessons. Each seminar providesan essential insight into the manypitfalls of the sale process andthe methods necessary to avoidthem.

To book onto a seminarvisit www.bcmscorporate.comor call 01635 296191.

FreeservicesIf you are considering selling your business, either now or in the future, pleasetake advantage of the free services below.

2

In this issue of i D E A LCredit crunch page 4-5With extensive media coverage of the credit crunchand turmoil on the financial markets what impactwill these events have on smaller and mid - marketcompany sales?

Completion – RM Consultants Ltd page 6French nuclear giant Areva acquiresRM Consultants Ltd

Valuation page 7What constitutes the ‘value’ of a business?

Completion – Provek Ltd page8Provek Managing Director talks to i D E A L

Inside deals page 9How can the human element of managing a dealovercome barriers to the sale process?

M&A terminology explained page 9

Taxation page 10Corporate structure for tax efficency

Completion - RTK Instruments Ltd. page 11Managing Director Tim McLeman talks aboutthe sale of RTK

Your Magic number page 12Managing your personal balance sheet

Ask us page 13Your questions answered on the subject oftraditional valuation methods

International news page 14News from our offices in the USA, Europe and Turkey

Philanthropy page 15BCMS Corporate in the community.

Deal highlights page 16Selected deals from the last quarter.

3

In a 24 hour news society the constant restatement of“doom and gloom” can make business owners jitteryand in my experience, disproportionately pessimistic.Clearly we are experiencing some transfer of thecredit crunch impact on banking to the real economy.And inevitably journalists and the media pounce onthis information since it makes a good story.

Here at BCMS Corporate, we assess the impact of thefinancial situation in what we consider to be a muchcalmer and measured way. At this point in time wehave not seen any decline in the number of businessowners planning to sell their businesses. In fact, wecurrently have as many clients this year as we had inthe same period last year. Crucially, this has also beenmatched by record levels of strategically motivatedacquirers. At the time of writing we have 43 clientcompanies at accepted offer stage who are nowentering the closing phase of the sale process. You canread about three recent successes on pages 6, 8and 12.

Further afield our operations in the USA continue togrow very strongly and we are about to open a newoffice in Texas.

All in all our own experience is that the smaller andmedium-sized business sale marketplace is far morepositive than many would paint it.

Brian Rebbettes - Chairman

With an unceasing focus on the credit crunch andturmoil in the financial markets these two issuesare the focus of our lead story, but with a ratherdifferent view of the affects of these issues on

company sales.

i DEAL 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 Corporateaccepts 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 andshould 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 thecontents of this publication.

Professional advice should be taken in relation to all divestment decisions. BCMS Corporate is a trading style of BCMS Corporate Limited.

i D E A L

4

Company sales buoyedby credit crunch

Relatively speaking mega-deals have all but dried up – the ‘credit-crunch’ though hashad little impact on strategic acquirers seeking to buy smaller and mid-marketbusinesses – demand is still very strong and business owners, having made thedecision to sell, can be confident that their plans need not be postponed.

BCMS Co r p o r a t e • C r e d i t c r u n c h

5

Reading headlines dominatingthe national print media and

listening to the reporting bybroadcast media of the ‘credit-crunch’, anyone could beforgiven for the belief that theentire UK economy is about to hitthe buffers. Business owners,based on this, might deduce thatnow is a bad time to sell abusiness; look beyond theheadlines though and there isvery good evidence that now isnevertheless a good time to sell.It would be wrong to dismissconcerns entirely and clearly weface some challenging times,some sectors are undoubtedlymore vulnerable than others. It isimportant though to achievesome balance in reporting thewider health of the economy andthe on-going capability of goodbusinesses to finance growth,whether organic or acquired.The mass media, largely based inLondon, does tend towards ametropolitan view of theCountry’s economic well-being,heavily influenced by financialservices. The City of London hasenjoyed an unprecedented boomdriven largely by financialservices during which thefundamental rules of lendingwere effectively set aside allowinginappropriate amounts of debt tofinance inappropriate,unsustainable activity –compounding this over-lending,what has proved to be poorquality debt was then packagedup and sold on by the originallender to other banks andinvestors.The mortgage marketexperienced the worst excesses ofreckless lending but the largercompany acquisitions market,which has now experienced rapidcontraction, was also fuelled byeasy access to debt.Turning to the wider companysales market however, the realityis distinctly different. Smaller andmid-market deals are much less

dependant on debt, particularlythose involving trade buyers andprivate equity which raisedsignificant amounts of newmoney in the past few years, agood deal of which is still to bedeployed. What debt is needed,the banks can get comfortablewith and accommodate withoutthe need for syndication(bringing in other banks to shareperceived risk). The vast majorityof these smaller and mid-markettransactions continue unnoticed,well below the radar of thenational media.The dearth of bigger deals willalso most likely underpin interestin smaller and mid-marketcompanies. This is reflected inour own internal measures; hereat BCMS Corporate we track manydifferent metrics but a keyindicator of the health of deal-making is the number of signednon-disclosure agreements(NDAs) our ‘prospect generationteam’ receive from prospectivebuyers each month. The team isachieving record numbers [NDAs]reflecting this very stronginterest from acquirers in smaller

and mid-market companies. Thisin isolation would at best onlysuggest that deals will continue tohappen, many of these potentialbuyers though are moving fromNDA stage to meaningfulmeetings with our vendor clients,making competitive offers andprogressing to completion – infact the number of business saleswe are completing is up on whatwas a very good 2007 for BCMSCorporate and its clients.Deal-making involving strategicbuyers in the smaller and mid-market sectors is incrediblyresilient and, in our experience,remains in very good health.Smaller and mid-marketcompanies and many activeacquirers of all sizes, did not inthe large part, binge on debt overthe last few years – they stuck tothe principles of goodgovernance, have healthybalance-sheets and the capability,when properly marketed, toattract buyers or to undertakeacquisitions.

See page 3 for Chairman’s comment

B CMS Co r p o r a t e • C r e d i t c r u n c h

Agovernment announcementrelating to future nuclear

commitments led to significantlyincreased interest in the industry.It was this which finallypersuaded the directors of RMConsultants that the moment tocapitalise on their successfulbusiness had come.After a steady stream ofapproaches from potentialacquirers for a number of yearsthe directors suddenly sawapproaches increase dramaticallyover a three month period. ‘Wecould see a great deal of changehappening within our industryand the interest from outsideparties in our business grewconsiderably.We realised this was an ideal timeto sell our business and maximiseits value’ explained ManagingDirector James Fitzpatrick.The directors thoroughlyresearched the marketplace forpotential M&A companies beforedeciding to enlist the specialistassistance of BCMS Corporate tohelp them sell their business.Once the sale process was under

way the business generatedconsiderable interest. In all 29meetings were undertaken withpotential acquirers including allthe major organisations involvedin the nuclear power industry, inthe UK and internationally.A range of offers were maximisedusing the BCMS Corporatecompetitive bidding process withthe eventual sale priceconsiderably exceeding theshareholder/directors’ estimatefor their business.As with many privately ownedbusinesses, the directors werealso extremely concerned for thefuture welfare of the staff whohad helped build and sustain thebusiness. In view of this theychose to accept an offer whichcombined a competitive pricewith a close strategic fit.James Fitzpatrick said ‘The offerswere more than we initiallyexpected and once past that pointour decision was very muchbased on the future prospects forour staff and how they would betreated. In the end, we chose thesecond highest financial offer

because we felt the overall offerfrom Areva provided the bestoption for the future of all ourstaff.’Of BCMS Corporate he added: ‘Iwould recommend BCMSCorporate without hesitation.We were very happy, we are verypleased.’François-Xavier Rouxel, SeniorVice President for Strategy, ofacquirer AREVA, said: "Theacquisition of RM Consultantsdemonstrates our ambition toplay an active role in the UK’snuclear renaissance. RMConsultants’ expertise will allowAREVA to offer solutions whichare tailored to the needs of itsBritish partners.”

Nuclear knowledgeattracts worldleading acquirer

6

BCMS Co r p o r a t e • D e a l c o m p l e t i o n

RMC Consultants directors Julian Hyde (left), JamesMcGuigan (second left), James Fitzpatrick (second

right), Don Richardson (right) with Arevamanagement Alain Gauvin and Dominique Mockly.

For the full interview with James Fitzpatrickplease visit www.bcmscorporate.com

7

There are many reasons whyowners want to sell their

businesses but perhaps the mostcommon, certainly in ourexperience are: our business hasreached a plateau and to restartthe business growth-cyclerequires significant investment oftime and money; I want to pursueother opportunities; my businesshas become all-consuming; I usedto be an entrepreneur, now I’mdrowning in a sea of red-tape andregulation. These reasons arecited on a daily basis by ourclients, reasons which canbecome frustrations and have thepotential to impact negatively ona business if not acted upon.

Owners invariably establishbusinesses closely related to theirprevious experience, decision-making can be almost instinctivein its infancy and as the businessmatures decisions are taken withthe reassurance of knowledgegained and applied over manyyears. Despite this capability tomake the right decisions for theirbusiness on a day-to-day basis,many of our clients admit tostruggling with the decision tosell and the timing of an exit.This is in part, due to the lack ofreliable information on thesubject, added to which, mostowners will sell a business justonce in the course of theirworking lives; this singletransaction is their once-in-a-lifetime opportunity to releasethe value locked-up in a business

Think of a numberWhatever your reason for selling your business, getting the right advice is essential.

Some advice though can be very unreliable, perhaps none more so than on the issue of when to selland valuation. Delay and the risk of under-selling is a very real one for business owners. Seller bewareis perhaps an appropriate maxim in these circumstances rather than the more familiar ‘Buyer beware’

they have devoted many years tobuilding.

Unsurprisingly then, businessowners usually conclude thatprofessional advice is needed toachieve their aspirations, it ishere that the choice of advisercan have a profound impact onthe decision to sell and when. Thefirst step for many owners is topose the question – what is mybusiness worth? The answer tothis question will be used todetermine whether a sale of thebusiness makes financial sense;nothing at all wrong with this,provided of course, that thevaluation truly reflects the worthof the business.

Almost certainly, this questionwill be answered by an adviserrelating value principally to theprevious performance of abusiness using a return oninvestment (ROI) approach. This

method of valuation reduces it tono more than a financial matterand produces a value based onhow many years a buyer wouldtake to recoup their investment ifdivided by historical [adjusted]profits – typically between 3 and5 years for privately ownedsmaller and medium sizedbusinesses. We know at BCMSCorporate that this valuationmodel has significantshortcomings, it fails to takeaccount of the unique nature ofthe business, its clients, thepotential for growth, its marketposition and many other likelybenefits – any one or more ofthese benefits will motivate theright buyer. Experience tells usthat buyer motives vary widelyand have a significant impact onappetite for a business and theprice a buyer is willing to pay -strategic buyers outbid ROIbuyers by anything from40-250% for our client companies.

The BCMS Corporate position isclear – matching the right buyerwith the right seller is critical toa maximised sale price. It is notpossible to accurately value abusiness prior to marketing itfor sale simply because theidentity and motives of thebuyer are unknown.

BCMS Co r p o r a t e • V a l u a t i o n

BCMS Co r p o r a t e • C l i e n t i n t e r v i ew

Why did you decide to sellyour business?

‘I wanted to realise my assets tofulfil other life goals.’How did you find out aboutBCMS Corporate and why did youselect us to sell your business?‘Introduced by my solicitor.’Did you consider anycompetitors of ours and if so whydid you not use them? If youdidn’t consider any competitors,why not?‘Yes, I reviewed two alternativeorganisations. I selected BCMSCorporate because you presenteda sales approach to managing thesale lifecycle of Provek ratherthan presenting your approachas a list of contacts.’How did you feel the sale processwas managed?‘Exceptionally well. Not allstraight sailing but the skills andexperience of the key BCMS

Corporate people meant that Iwas very happy with theconclusion.’How important wasconfidentiality and why was this?‘Very – I did not want my staff orcustomers finding out before Iwas comfortable to tell them.’Did the sale process affect theeveryday management of yourcompany?‘Yes. This was a tough programmeof work and despite long hours itdid impact at times, so it wasimportant to minimize as manyrisks as we could throughout thesale lifecycle.’Are your staff staying with thecompany and was this animportant factor in the saleprocess?‘Yes they are staying and it wasvery important to ensure theongoing growth and success ofthe company.’

Learning to take a step forward

Trevor Pinder, ManagingDirector of Provek Limited,a provider of unique

assessment-led programmeand project managementsolutions talks to i D E A Labout his reasons for sellingand how the sale process

worked for him.

Will you have any involvement inthe business post sale and if notwhat does the future hold foryou?‘Yes, I will be supporting thebusiness for one or two days perweek for the first year.’Would you recommend BCMSCorporate’s services to anothercompany considering selling?‘Yes. The whole team were veryprofessional and I have alreadyrecommended BCMS Corporate toone potential business seller.’How satisfied were you with thesale price and terms achieved?‘Very satisfied. It is alwayspossible to see potentialimprovements but the BCMSCorporate Deal Leader did anexceptional job.’What is your overall opinion ofBCMS Corporate?‘A professional company,it puts the customer first.’

8

(L-R) Shaun Reason and Heather White ofHCS, Sunita Meigh from BCMS Corporate,Trevor and Mary Pinder of Provek

market and larger companyacquisitions involving millions ofpounds worth of considerationpotential acquirers cannot affordto simply trust a vendor withoutquestion.Determined by the perceivedrisks and, to a degree, dependenton the size and complexity of thevendor’s business the duediligence process may be littlemore than all sides meeting andexamining all of the pertinentissues and documents. On otheroccasions it may involve a sealedroom at a remote location wherethe potential acquirer studies allthe appropriate paperwork over anumber of days. Finally duediligence may also involve site

Q: What is due diligence?

A: Whether an intensivebelt-and-braces approach or

a more limited investigation ofspecific aspects of a companiesoperations, due diligence is anecessary part of concludingevery deal.In the mergers and acquisitionindustry due diligence simplydescribes the process thepotential acquirers undertake toverify the reliability ofinformation provided by a vendorabout their business and themarket in which it operates.Effectively, ‘Is the potentialacquirer buying what they thinkthey are buying?’ With mid-

9

What is due diligence?

surveys, particularly where thereare potentially sensitive issuessuch as environmental concernsor where the vendor’s businessmay involve large physical stocksof products.While there are no specificcriteria regarding who can orcannot undertake the duediligence process for the potentialacquirer, it is typically conductedby appointed specialists who areexpert in particular key areas offocus. These typically includepensions, property, humanresources and intellectualproperty.

“Our client, a manufacturerand service agent, chose to

use their own lawyer for the finalstage of their sale process (againstour advice) whilst the acquirerselected a friend with ‘corporate’experience. The communicationsbetween the lawyers could at bestbe described as poor and thiscontributed to a protracted duediligence process that seemed tobe meandering towards failure.Additionally, the unnecessarilylengthy legal process wasbeginning to cause legal costs tospiral out of control.

To avoid the deal failing at such alate stage we called a meetingbetween the acquirer and thevendor (excluding lawyers) with

Inside dealsIn this issue Deal Leader GlenMallaby provides an insight into how skilled and experienced deal

management prevented inexperienced legal representatives potentially causing the breakdown of a sale.

the express intention of workingthrough a long list of outstandingissues, most raised by thelawyers. During a three hourmeeting the vendor and acquireragreed all the outstanding issues,none of which they regarded asconstituting an impasse, andfinished the meeting byinstructing their lawyers tocomplete the deal.

Although our clients andacquirers are entitled to use theirown legal representatives, unlessthey have experience in companysale/acquisitions it invariablyguarantees that the legal processwill become protracted - at worstthis can cause the breakdown ofthe entire deal.”

B CMS Co r p o r a t e • T e r m i n o l o g y e x p l a i n e d

BCMS Co r p o r a t e • I n s i d e d e a l s

12

If a company which is beingconsidered for sale is amember of a group it may be

necessary to transfer certainassets to or from that companybefore the sale. Provided thatcertain conditions are met, suchtransfers are generally taxneutral.

However, the timing of suchtransfers can have implications.Certain anti-avoidance provisionsmay apply on a sale of thebusiness resulting in a charge totax by reference to such earliertransfers. This can include theclaw-back of previously claimedstamp duty or stamp duty landtax reliefs.

Despite this there are statutoryexceptions to the charge to taxand claw-back of the reliefs incertain circumstances.Otherwise, any gains may besheltered, rolled-over or, by wayof an election, transferred toanother member of the seller'sretained group.

Following a sale of the shares inthe business a corporate vendorcan avoid the charge tocorporation tax on chargeablegains if the sale qualifies for theSubstantial ShareholdingExemption relief.

Thinking of selling acompany within your

group?Consider this…

Whether or not you are considering a sale, taking time to examinethe impact your corporate structure can have on your tax liabilitycan be hugely beneficial writes Nitzan Cohen, associate and

specialist tax lawyer at law firm Thomas Eggar LLP.

Now that taper relief has beenabolished, an individual sellermay benefit from theentrepreneurs' relief whichreduces the capital gains taxliability, in respect of the first£1M of qualifying gains, from18% to an effective rate of 10%.Certain conditions need to applyfor the above reliefs to beavailable. One of the conditions isthat the relevant company orgroup is a trading one. You willneed to ensure that any non-trading activities do not have asubstantial effect on thecompany's or group's activities.HM Revenue & Customs (HMRC)consider 'substantial' as meaningat least 20%.

Other things to consider include:

•Group relief can result in areduction in profits of thebusiness, which in turn, results ina lower corporation tax liabilityfor the business. Timing of thesales will need to be consideredas Group relief is only availablefor accounting periods duringwhich the relevant companies aremembers of the same group. Thebusiness will cease to be treatedas part of the vendor's group assoon as there are 'arrangements'for the change of control of the

business. Arrangements includenon-binding heads of terms andany claims for the relief shouldbe made before completionotherwise the co-operation of theacquirer will be required.

•Any loans between the businessand its shareholders or othermembers of the group should berepaid before sale completion.

•Pre-sale dividends may need tobe considered where theSubstantial ShareholdingExemption relief is not available,as corporate acquirers are nottaxed on dividends received fromits UK members. Pre-saledividends are not very effectivefor individual vendors. However,surplus cash in the businessshould be distributed toshareholders in order to avoid adispute with HMRC that profitsare reclassified as capital gains,hence, avoiding the higher rate oftax on dividends. Vendors willneed to convince HMRC that anycash left in the business isnecessary for working capital orother future tradingrequirements. As usual, anti-avoidance legislation may betriggered on pre-sale dividendsso, as always, caution and earlyadvice must be considered.

10

BCMS Co r p o r a t e • T a x a t i o n f e a t u r e

negotiation stages of the dealwere condensed into a shortertime frame. The service createdadditional competition for RTKwhilst maintaining the existinginterest. In total the deal durationwas just 3 months; 39 potentialacquirers were identified andinitial discussions with 35 ofthem resulted in 10 Non-Disclosure Agreements beingsigned.

The deal was lead by BCMSCorporate’s Andy Denny, ‘It wasclear early in the sale processthat RTK was a strongproposition,’ he said, ‘the sale is avery good example of what wecan achieve for our clients to atight deadline.’ he added.

RTK Instruments, a leader in thedesign and manufacture ofprocess alarm products and

related industrialinstrumentation equipment tothe power, process and utilityindustries worldwide has beensold in a £multi-million deal.

Unlike most of our clients,when Tim McLennan,

managing director of RTKInstruments engaged BCMSCorporate to sell his company hewas already in discussions withpotential acquirers. The processhowever was consuming so muchof his time that there was a realdanger it would have adetrimental effect on businessoperations.

‘The discussions and negotiationswere already becoming timeconsuming, complex and lengthyand it made sense to let BCMSCorporate manage this for me,leaving me to get on witheveryday management,’ heexplained. ‘I had heard of BCMSCorporate many years ago andwhen their mailer was deliveredpromoting a seminar in Leeds Iwent along.”

In light of the relatively advancedstage of discussions with somepotential acquirers, speed was animportant factor, ‘I didn’t want tospend more time assessingvarious M&A companies. Theseminar provided a quick, simpleand acceptable solution for me.’

The RTK project was aNegotiation only project for BCMSCorporate which meant that theresearch, qualification and

BCMS Corporate instrumentalin the sale of RTK

After negotiating with the variouspotential acquirers, the spreadbetween lowest and highest offerin this case exceeded 300%.‘There were times when I wouldsimply have accepted a‘reasonable’ offer but AndyDenny advised we reject it. Withthree strong acquirers allcompeting and bidding for mybusiness I achieved a price farhigher than I would haveaccepted.’ said Tim McLennan.

Summing up his experience ofBCMS Corporate Tim said ‘Thewhole process was managedconfidently – much better than Icould have done it. I think thatremoving the emotional elementfrom the negotiations is a greatadvantage. Andy’s experience inthe sale process was critical.’

B CMS C o r p o r a t e • C a s e s t u d y

11

If asked to value your most critical assets, how accurately couldyou do it? What does your personal balance sheet really look like,and how will it influence the future you build for you and yourfamily? Stefan Wissenbach, CEO and founder of The WissenbachGroup explains the unique Magic Number™ concept and

illustrates why you should know yours.

12

How often do you make adecision that impactsupon your business?

Every day probably. How oftendo you make decisions aboutyour finances that transform theway you manage them? Perhapsnot as regularly. And how oftendo you feed all of these factorsinto a master plan that takes intoaccount where your business istoday, where it will be tomorrowand how all of this will shape thefuture for you and your family?What we usually find is thatbusiness owners cancommunicate quite comfortablyhow much their property is worthand how much they have in theway of savings and investments.Valuing their business provides asomewhat greater challenge, asmore often than not, thetraditional, conventionalvaluation methods fall short ofproviding an accurate figure. Ofcourse the often used maxim thatyour company is only worth whatsomeone will pay for it still ringstrue, but thankfully, specialistssuch as BCMS Corporate canensure that figure is as high aspossible.Where most business owners lackinsight is in how these crucialassets fit into the big picture. Andeven more importantly, how they

will influence their Magic Number™.Put simply, your Magic Number™is the amount of accumulatedwealth you need in order to befinancially independent, enjoyingyour desired lifestyle, for the restof your life. Identifying yourMagic Number™ and creating aReally Effective FinancialStrategy™ is a unique processthat we have developed here atThe Wissenbach Group, and it ischanging the way our clients lookat finance, business and theirfutures. Your Magic Number™and vision of your desired futureshould guide every majorfinancial decision you make andit takes into consideration everyaspect of your life – far beyondyour finances, from where youwish to live, where your childrenwill be educated and the kind oflifestyle you lead for the rest ofyour life.And why do you need to plan tothis extent? I’m often surprisedby how many people don’t have awritten plan for their lives. Theirplans are top level, big picture,and usually exist purely in theminds of those who make them.Which might sound perfectlynormal, but when you considerthat most people also have acomprehensive, prescriptive planfor financial management after

they die, written down in theform of a will, then it does seemslightly back to front!We all know that objectives withbenchmarked progress points arefar more likely to materialisethan intangible, abstract goals –that’s the whole point of businessplans. But a simple business plan,or exit strategy simply isn’tenough. You must be working toa holistic financial strategy thattakes into account your personalgoals alongside your businessobjectives. How can you makeday-to-day or even life-changingbusiness decisions withoutunderstanding the impact theyhave on the big picture and youroverriding aspirations for youand your family?Understanding how to value andmanage your assets is ofparamount importance – but it isonly the first step. Moving fromyour current situation to thefuture you dream of, is aboutstarting with your MagicNumber™ and implementing astrategy that will close the gap.

B CMS Co r p o r a t e • F i n a n c i a l p l a n n i n g f e a t u r e

Identifying yourMagic NumberTM

Q: You state that the‘traditional’ method of

selling a business is flawed andyet it has worked successfully fordecades. How can it be flawed ifso many businesses have beensold using this method?

A: It can be very simple to sella business if maximising the

sale price is not an issue. I amsure Alan Sugar could sell hisbusiness empire tomorrow for a(relatively) paltry £500m forinstance! If the fact that in themarketplace an acquirer may bewilling to pay £800m+ was not anissue then I am sure he would bevery happy.However, business owners allexpend a huge amount of time,money, commitment and sheerhard work on their businesses togrow them and make themsuccessful companies. After whatfor many is a lifetime’s work it isnot unreasonable for them, whenselling, to want to achieve theabsolute maximum value for theirefforts.

Traditional valuations take themost recent historic financialperformance of the business andapply a multiple to its (adjusted)profits. The resultant figure is the‘value’ of the business andindicates how many years itwould take an acquirer to regainthe monies that they invest.The tragedy of this style of‘valuation’ is that it takes noaccount of all the assets of the

business. For example, a businessmay also have a stable customerbase, a long history of successfultrading, a loyal customer base,blue chip clients, long termcontracts, low staff turnover,ownership of valuableintellectual property, a strongand positive brand name, etc.All of these assets of the businesshave a value but without activelymarketing them the value to anacquirer will never be known. Acompany sold without promotingthese valuable assets is acompany that is undersold. It isa cornerstone of our entireprocess that each and everybusiness we sell has all the aboveassets (and more) proactivelymarketed to each potentialacquirer and it is this that is asignificant factor in ensuring weachieve maximum value.

Your questionsanswered

In each edition of our magazine a senior member of our management teamwill be addressing one of a number of the most common questions we are asked by our clients.In this edition Kate Carty, Operations Manager answers a fundamental question about our

refreshingly different approach.

If you have a question you would like answeredplease email it to ross.meigh@bcmscorporate.com.

B CMS Co r p o r a t e • Q u e s t i o n s a n s w e r e d

13

Only then can you trulyunderstand the implications ofevery decision you make for yourbusiness, your finances and yourfamily. What’s more in the fast-moving, ever-changing world welive in, it’s an essential tool forthose who wish to make maximumprogress in the minimum time.

For more information on TheWissenbach Group and how youcan find out your own MagicNumber™, please visitwww.wissenbach.co.ukor call Allyson McAlisteron 01676 524 460.

14

North AmericaTo manage the rapidly

spiralling demand from a raftof new clients our American officehas recently relocated to a new6,000sq/ft office on theprestigious Broad Street,Manhattan. In addition toincreased office space andmeeting rooms for both clientmeetings and business operationsthe office also features state of theart communication systems whichincludes a live video link system.Whilst the significance of thelocation of our office may not beobvious to many non-US citizensit is next door to the Worldfamous New York Stock Exchangein the heart of Manhattan’sfinancial district!Bob Goldsmith, President and CEOof BCMS Corporate in the UScommented ‘Our New York officehas moved just a short distancebut our US operations havecontinued to expand muchfurther afield, from here inManhattan to the mid-Atlanticregion. We are now hostingseminars in many more locationsleading to the opening ofadditional offices to keep pacewith demand. A Texas office willbe up and running by the end ofthe year.’

TurkeyBCMS Corporate in Turkey

recently celebrated its 35thseminar held in Istanbul. The everpopular seminars attracted, co-incidentally, 35 business ownersfrom around the capital, alllooking to sell their businesses formaximum value.

The importance of selling formaximum value was alsorecognised by Family Businessmagazine, itself part of Turkey’snational Economist magazinegroup, as they published alengthy article entitled ‘Don't letthem grab the control as you sellyour company’ after attending aBCMS Corporate seminar.

The success of our refreshingly different approach toselling businesses for their maximum value is spreadingglobally and we now have offices operating in NorthAmerica, Scandinavia, Turkey and Latin America.

International news

ScandinaviaThe highlight of the summer

was the sale of Protector AS toVSP Holding AS in Norway.Protector AS is a highlyspecialized company working onsolving problems concerningcorroding concrete structures,with a focus on cathodicprotection.Jarl Yrwing, manager of BCMSCorporate’s Norwegian office said‘Through this merger the newjoint company, with a turnover of£16 million, will increase itscompetitiveness for largermaintenance assignments throughincreased capacity nationally andinternationally. We are verypleased to have shown again howsuccessful our process is.’

B CMS Co r p o r a t e • I n t e r n a t i o n a l

15

Philanthropy“Do what you can, with what you have,where you are.”Quote on philanthropy attributed toTheodore RooseveltIt never ceases to impress us how much oftheir time many of our staff and indeed ourclients devote to community and charitablecauses.In each issue of i D E A L we will highlight justsome of the community and charitableactivities our staff are engaged in togetherwith details of some of the charitableprojects BCMS Corporate as a company alsoparticipates in.

Bangalore orphanage

Much of what BCMS Corporate is involved intakes place in the local Berkshire community.

However, one exception is the work of “The poorand needy benefit trust” a charitable trustestablished by the directors of BCMS Corporate toassist people in the Indian cities of Kakinada andBangalore.

One of the earliest projects for the Trust was thebuilding of an orphanage in Bangalore which nowhouses twenty girls aged between three and ten.The trust accepted the long-term responsibility foreducating, feeding and clothing the children, aswell as providing support for full-time carers. BCMSCorporate chairman Brian Rebbettes explained thelife previously endured by the youngest child nowresident in the orphanage: “All the children havebeen rescued from horrific conditions. One threeyear old, for example, was abandoned naked on arefuse dump where she lived alone for six monthssurviving on whatever scraps of food she couldfind. When rescued she was full of worms andcovered in lice. She is now, eight months later, wellfed, lively and loving her new ‘family’ at theorphanage.”The Trust has also ensured that a seven year oldgirl from the orphanage was able to have a vital eyeoperation, saving her sight. One of the care workersat the orphanage also underwent life saving heartsurgery again financed by the Trust.

The Matt Hampson Trust

Sporting clubs have a long tradition of associationwith charitable causes and Basingstoke Rugby

Club is no exception. The club, of which BCMSCorporate deal leader Glen Mallaby is a youthcoach, has raised over £2,000 for an injuredLeicester player, Matt Hampson, who has beenparalysed after breaking his neck during a game.In addition to the money raised by the Club, BCMSCorporate and a number of clients also contributedto the fund. Despite the terrible injury suffered byMatt, he is an inspiration to many, workingtirelessly to raise funds for spinal research and hecontinues to promote the sport to which he is sodedicated. For more information please visitwww.matthampson.co.uk

Interview preparations for school leavers

The interview process can be a daunting one foreven the most experienced of us but for the

employees of tomorrow, currently nearing the endof their education, an interview is also step into theunknown. An interview for a first job can often beas disappointing as it is exciting without the skillsand experience to perform well. In view of this staffat BCMS Corporate now provide interview trainingprogrammes for Year 10 pupils (aged 14) at twolocal schools. Pupils are required to learn about thecompany and select a role that they wish to beinterviewed for. Interviews take place either at theirschool or the BCMS Corporate offices in Kingsclere.Training and Development Manager Tracey Dennysaid. ‘The interviews help identify the strengths ofthe pupils and provide them with an earlyindication of the type of roles they may wish topursue in their future careers. We provide feedbackand advice for each of the interviewees to helpthem prepare for their first real interviews’. To dateten interview sessions have been completed withpupils and more are scheduled throughout theyear.

B CMS Co r p o r a t e • P h i l a n t h r o p y

BCMS Co r p o r a t e • D e a l h i g h l i g h t sSOLD: Nuclear risk managementconsultancy.Sale price: £9,000,000Price maximised by: £6,500,000

SOLD: Installer of ground source energysystems.Sale price: £9,000,000Price maximised by: £7,500,000

SOLD: Cleaning detergent manufacturerSale price: £5,000,000Price maximised by: £3,000,000

SOLD: Designer and builder of water &wastewater treatment systems.Sale price: £5,200,000Price maximised by: £2,700,000

SOLD: Manufacturer and supplier ofhousehold laundry and cleaning detergents.Sale price: £5,000,000Price maximised by: £3,000,000

SOLD: Maintenance service provider tofacilities management industry.Sale price: £3,800,000Price maximised by: £1,300,000

SOLD: Distributor of fasteners, fixings andancillary products.Sale price: £3,400,000Price maximised by: £1,400,000

SOLD: Chemical manufacturer.Sale price: £1,300,000Price maximised by: £650,000

SOLD: Refrigerated vehicle conversionsSale price: £1,070,000Price maximised by: £770,000

Our process drives the sale priceupwards through a combinationof carefully selected potentialacquirers and a competitivebidding environment. Thismaximises each sale price; the

Deal highlights

‘Price maximised by’ figure showsthe amount our process improvedthe price by over the lowest bidreceived. In these examples wegenerated a total of £26,820,000more for our clients!

Our refreshingly different approach to the sale process continues togenerate successful sales and below, for your information, we haveprovided a small number of recent deal highlights. The companieswe have successfully sold come from a wide range of industries

and have all been sold for maximum value.

‘I would just like to thank you for allof your efforts and the veryprofessional way in which you drovethe sale of my business tocompletion….I really appreciated yoursupport to me during some of those‘exciting’ times. Your negotiationskills and experience through thisprocess were excellent – very muchappreciated…THANK YOU ALL FOR AGREAT JOB DONE.’ – Trevor Pinder,Provek.

A full transcript of this can be foundat www.bcmscorporate.com

“”

BCMS Corporate Plantagenet House Kingsclere Newbury Berkshire RG20 4SWT: 01635 296191 F: 01635 299502 E: info@bcmscorporate.com www.bcmscorporate.com