Guest Article: Declan Williams, Beer & Young – Turnaround Investment Solutions
‘Business Angels Adding Value in Turnaround’
The turnaround market has always been fertile ground for business angel investors. They usually bring sector skills and much needed positivity to re-energise a distressed SME, as well as the ‘oxygen’ of investment. Often what is needed is the ability to act quickly and make decisions that protect the value of the business. This is where the incumbent owners/management can benefit enormously by working alongside another entrepreneurial figure who will act as a catalyst to simply get things done.
It is easy to be critical when a business starts to struggle and the management do not put a recovery plan in place. People don’t plan to get in trouble, so when they do, it is not surprising that they make mistakes and fail to address the critical issues confronting them. Emotion can take over and simply hoping things get better is a common theme. Business angels will be empathetic and many will have experienced similar challenges themselves. However, they have the benefit of being able to take a ‘helicopter view’ and the skills to execute a recovery plan.
Retaining and protecting goodwill are key issues in distressed situations. Business angels will engage with the stakeholders and work alongside them to put the business back on much firmer ground. This will mean talking to customers, suppliers, bankers, employees, landlords, etc. Relationships need to be re-built and stabilised to ensure the recovery plan can be delivered. The risk profile of the investor is also significantly reduced as threats to the business are dealt with.
At Beer & Young we are seeing increasing numbers of new business angels registering (now over 1000) with the Beer Group and showing an appetite for turnaround opportunities. They typically look to invest between £50,000 and £1,000,000. This is great news for our clients as there is a significant correlation between the volume of registered investors and the chances of successfully raising funding. New investors are the most active and keen to leverage their skills at the earliest opportunity.
Although the green shoots of recovery seem to have arrived there is always a lag effect in post recessionary periods. Many thousands of SMEs are still undercapitalised and struggling. However, many of these businesses now have the opportunity to raise business angel capital and a route to market via Beer & Young.
Thankfully there is a stronger recovery culture now than has been evident previously and we firmly believe business angels will have an increasing role to play in helping UK plc back to health. We never like seeing SMEs going bust and rarely do we come across situations where something positive cannot be achieved. It is very rewarding when you help a struggling business receive investment and successful relationships develop between like minded entrepreneurial people.
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