LB Corporate Finance Newsletter – April 24

So far this month we have been involved in a number of successful completed transactions and received great feedback for our assistance. If you have clients planning for a sale, please ensure you make them aware that the Corporate Finance team can assist.

We have seen a few instances where clients have signed up with other agents to assist with the sale of their business, which we believe will costs the client more and won’t receive the same level of service that we can offer them. Our email newsletter warning CF clients of hidden fees when selling their business (LB Group | Selling your Business | Beware of hidden fees (mailchi.mp)) was sent out early April.

Also, Matt will be attempting to complete a 100km walk in 24 hours from Richmond to Brighton (the key word here being attempting) towards the end of May in order to raise money for charity of which he will share more info about in the coming weeks … but for more info on this stupid challenge please see this link: https://www.ultrachallenge.com/london-2-brighton-challenge/challenge-options/

Complete transactions for the month so far….

• Adexchange – We assisted the client following an approach, which included liaising with purchaser in relation to deal structure, calculating target net working capital, review of contracts, supporting with the transaction and preparing completion account.
• Electrifire – Having been approached to sell their business, we assisted the vendors in relation to structure of the transaction, review of contracts and supporting throughout the transaction.
• NV Tools – We assisted the client in negotiating the value of their business, as well as the most suitable deal structure, together with review the contractual documents. We also assisted the client put in place warranty and indemnity insurance on the transaction which is what they wanted.
• 5Y Technology – EMI schemes are finally starting to get approved quicker by HMRC!
  We also have a number of other transactions in progress, some of these we are hoping to get over the line by the end of the month.

Referrals

As always, we are always looking for opportunities through internal referrals, please reach out to us and look out for potential opportunities which often occur in the following circumstances:

Growth – If the client is looking to grow some of the services we could provide are:
✅ Growth by acquisition – we could help our clients identify targets.
✅ EMI scheme – lock in the key member of staff.
✅ Forecast – might need to do a cash flow forecast for this.
✅ Funding – Do they need funding to achieve their growth plans.

Retirement – Services we could provide relating to this:
✅ Sell side mandate – help the client sell their business.
✅ Valuation work.

Funding – When preparing accounts and working with clients if you see any of the following, please let us know:
✅interest rates on existing debt looks high
✅the debt is not suitable for the client in terms of there being cashflow issue
✅the debt is not suitable for their growth plans or is up for renewal.

If the interest clients are paying across the different types of facilities is greater than the following, please contact us to see if there is a better product for them.
✅ Invoice Finance loan – above 3% plus base
✅ Business loan – 9%+
✅Commercial mortgages – 7%+
✅ Vehicle finance/Asset finance – This changes a lot dependent on the asset but anything above 7%
Note: the current Bank of England base rate stays at 5.25%. The market is predicting that base rates should fall later this year.

Market Activity

Industry statistics for March show that deal volume was down both when compared to the previous month and when compared to the same time last year, with the market feeling flat. Transaction volumes have been impacted by the global economic position and the levels of interest’s rates.

The mean multiples, when looking at the EV (enterprise value)/EBITDA of deals up to January 2024, across all sectors was 10.9. To consider the multiples which client’s businesses could achieve we would need to consider their industry sectors they are in and consider the size of the entity.

Many thanks,

Stuart.