FEO Director Led Workshop - Everything you wanted to know about money, but were afraid to ask!

Thank you to our Panel David Hall Beverley leisure Homes, Steve Bramall and Peter Dearing Smailes Goldie, Rebecca Dymond Dymond Accountants and Jon Brunton from the HEY Growth Hub.

This event continues our series of Director Led Workshops.

What is Private Equity?

Private equity describes investment partnerships that buy and manage companies before selling them. Private equity firms operate these investment funds on behalf of institutional and accredited investors. Private equity funds may acquire private companies or public ones in their entirety, or invest in such buyouts as part of a consortium. Private equity is often grouped with venture capital and hedge funds as an alternative investment.

Does the investment partnership have to always have the controlling share?

No.

What is Venture Capital?

VC provides financing to startups and small companies that investors believe have great growth potential. Financing typically comes in the form of private equity (PE). Ownership positions are sold to a few investors through independent limited partnerships (LPs).

What is the difference between the two?

Venture capital tends to focus on emerging companies, while PE tends to fund established companies seeking an equity infusion. VC is an essential source for raising money, especially if start-ups lack access to capital markets, bank loans, or other debt instruments.

How do i access Grants?

Jon Brunton suggested speaking to your local council or Growth Hub advisor as they know what Grants are available and for who. David Hall suggested if you want one to start looking instead of waiting until you need one.

How do you value your business?

It was advised to look at your cash in and cash out ratio as well as your debts. Similar to when you apply for a mortgage. It also always depends on what someone is willing to pay. Speak to Smailes Goldie and they can help you work this out.

How do you prepare to sell your business?

Maintainable earnings are the most attractive thing for a buyer - monthly revenue or fixed term contracts guarantee this. Not every business can offer these things but if you're thinking about selling it's worth looking into how your business can do this.

You need to also make sure that you aren't the business, do they want to buy the business or you. If you don't come with it and you are the business this can put a lot of buyers off. A strong management / leadership team that comes with the business is always a great selling point as the business will continue to run even new ownership. 'Make yourself the least important person in the business'.

Before selling, always speak to an accountant first, have NDA's in place before discussing anything with any potential buyers and obtain an information memorandum which is a projection / forecast of your business. It is also crucial that you have all your laws and regulations checked for example, Customer and employee T&Cs, employee contracts etc.

It all depends on who you are selling to but large corporations always ask for more info.

Can i sell shares to finance growth?

It was widely recommended that selling shares should be a last resort but if you do to always have a shareholder agreement in place.

What is a Holding Company and do i need to have one?

A holding company typically exists for the sole purpose of controlling other companies. Holding companies may also own property, such as real estate, patents, trademarks, stocks, and other assets. Holding companies enjoy the benefit of protection from losses. If a subsidiary company goes bankrupt, the holding company may experience a capital loss and a decline in net worth. However, the bankrupt company’s creditors cannot legally pursue the holding company for remuneration. If you need any further information, please ask.

We also discussed other ways to invest growth within your business, The British Business Bank via Mercia was mentioned, as well as Funding Circle, Sirius in Hedon as well as local funding.