Colin Burns is a Director in our debt advisory team and a banking expert. Following the financial crisis in 2008, the role of the bank manager changed. In this article Colin offers his thoughts on the value corporate finance advisors can bring to help business owners steer through times of financial uncertainty.
"Most owners or management teams will only go through one or two transformative transactions in their life."
The world has changed enormously since the days you could speak to your local bank manager as a one stop shop for the provision of financial products, services and advise. Whether this be for growth funding, an acquisition or indeed guidance on the sale of your business, the landscape has definitely changed. The myriad of lenders have wide variations on credit appetite and technical ‘know-how’ when it comes to advice generally.
Most owners or management teams will only go through one or two transformative transactions in their life. Many may encounter ongoing business funding challenges on a more regular basis. Whether it be transformative or business as usual transactions, it is important to get them right!
But corporate finance advisors cost money, so as with every business decision you make, you need to understand the benefits an advisor can bring and whether or not they add value. So, let’s have a look at some key areas of expertise a corporate finance advisor can bring to the table.
While an advisor will not have an intimate understanding of your business from the outset, years of experience dealing within businesses in similar sectors can provide an invaluable sounding board to gauge your strategy and highlight the challenges you might face. This guidance may take the form of challenging assumptions or suggesting alternative strategies for consideration based on prior client experience and outcomes.
If you have never been through a transaction before, you are entering the unknown. An advisor can explain what lies ahead, how things will work, who the various parties will be and what will be expected from them. This is essential for an owner or management team so they can plan resources and set expectations accordingly.
“by failing to prepare you are preparing to fail”
As the old adage goes “by failing to prepare you are preparing to fail”. This applies as much to preparing a business for sale through to asking for an overdraft to meet working capital demands. While the extent of preparation will vary on a case by case basis, this is something that a corporate finance advisor will understand, be able to assist you with and make certain the correct amount of homework is undertaken to ensure the best chance of success.
While we know you are good at running your own business, advisors are good at running transactions and providing advice. While no deal is ever the same, they all have some key stages to progress through e.g. preparation, negotiating offers and terms, diligence and reviewing lending and legal documentation to ensure these align with the agreed commercial positions. This takes the pressure off you and your team and helps minimise disruption to the daily running of the business.
With most transactions there are often some stressful times during the process, and it is not uncommon that discussions can become somewhat fractious. Having an advisor can take that pressure off you by having these conversations on your behalf and helping to maintain perspective when things seem to be going awry. These can often be business critical events, so our advice is that these are best not navigated alone.
The above are some examples of key areas where a corporate finance advisor can help you and the value they bring to a transaction. At Shaw & Co we have wide ranging experience in the M&A market, equity and debt raising and regularly advise clients on a number of topics not least the recent government funding schemes to support businesses impacted by Covid-19.
Having famously failed to raise money on the BBC's Dragons' Den, Trunki's owner Rob Law MBE wanted to drive his company forward. With his sights set on international expansion, he asked us to help him make it happen.
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