Royal Bank of Scotland increase the staff in their recovery department

The Royal Bank of Scotland has had its fourth consecutive pre-tax loss since being bailed out by the tax payer in 2008. The loss for the year comes to a total of £2 billion, an increase of £900 million on last year.

Within the last year loan defaults on all sectors within the group’s core business has increased by
£1.4 billion. Loans and advances classified as core were down year on year (excluding 3 sectors). Net loans made have decreased in the last year by £18.5 billion.

There has been a year on year increase of 800 staff in their Integration and Restructuring division. December of 2010 saw 300 team employees whereas in December 2011 the number was up to 1100.

Senior associate of Beer & Young comments: The fact that RBS have had to increase their recovery staff so significantly shows how many more clients must be at risk. If your company is struggling from financial difficulties please give Beer & Young a call today

Turnaround Investment Funding

The ongoing economic uncertainty is not aiding in inspiring investor confidence in most areas. The industry figures reaffirm this by showing a decline in turnaround private equity investments between 2007 and 2011. It would therefore be fair to say that companies in the current climate would assume that turnaround investing is not something that private equity is interested in.

However, over the past 2 years things are changing. Banks have accumulated large portfolios of assets resulting in them seeking funding partners to help them exit positions in assets. Funding has also taken a more alternative path, with the individuals investing directly into the business, rather than following regulated fund structures.

Although many companies have closed between 2010 and present day, Beer & Young are still a thriving business. With the UK’s unrivalled number of active turnaround investors, where better to turn if your business is in trouble? Beer & Young are testament to the fact that there is still a market for turnaround funding.

SME Growth Encouraged by Chancellor

The Chancellor has made plans to help with funding issues and stimulate growth in the SME community. They will be given the opportunity to focus on running their businesses, rather than facing the hurdles of the red tape surrounding issues like planning laws, employment laws and health and safety, which will all be relaxed.

The pressure will also be reduced, as plans to put in place auto-enrolment pensions have been postponed as well as extending the business rates holiday by 6 months.

The opportunity for SME’s to attract cash investments to assist with their growth has increased, due to the relaxation of the rules governing the main Enterprise Investment Scheme.

Our initial reaction to this is that it sounds all very interesting and positive but the proof as ever is in the delivery rather than the sound bites. Beer & Young have a 14 year track record of delivering what business owners really need, which is new money.

Beer & Young came to the rescue at the 11th hour

Nick Young, managing director of Beer & Young is featured in an article in the ICAEW magazine (Institute of Chartered Accountants) this month.

The article was centred on the world of turnaround and funding. Its lead feature was a case study where Beer & Young successfully raised 2.5million.

The company had exhausted its funds and the bank was unable to provide the funding it required. At this point Beer and Young stepped up, introducing 7 qualified investors, from which 2 firm offers were materialised and one was accepted.

This saved the jobs of all the employees and prevented the company from having to close its doors 2 months later as predicted would have been the case without the help of Beer & Young.

Keep your business in existence… contact Beer and Young today!

Downing Street Business Angels

The Managing Director or Beer & Young went to visit David Cameron at 10 Downing Street for a breakfast meeting about business angels.

The breakfast event was held by Lord Young of Graffham (Enterprise Advisor to the Prime Minister), with the Prime Minister himself opening the event with a ten minute speech.

The aim of the event was to promote awareness, share stories and views and find out what else could be done to encourage the UK Business Angels market.

Business angels play a vital role in offering financially struggling companies investment as well as their expertise and experience.  The government have recognised the importance and potential of the industry and are giving it their full support.

Beer & Young are leaders within the industry, currently hosting the largest number of active Business Angels and private investors. Call Beer & Young today if your business is in trouble and see how they can help you.

UK Business Distress

The UK economy appears to face increased business distress in the near future, especially companies in the South West which are very likely to face another tough year.

When it comes to critical distress, the South East has had a year on year increase of 33% and London has had a rise of 19%. These regions are starting to face severe financial issues; however, up until recently they have seemed recession proof. This could indicate the progression to a deeper stage of the recessionary cycle in the UK. Particularly in the automotive, construction, general retailing, professional services, property sectors and travel and tourism the distress levels have gone from significant to critical levels.

Due to the Olympics being held in London this year, it is believed that there will be serious consequences to the travel industry in particular, with at least one household name failing. As well as the tourism sector, with West End’s theatres already reporting a 95% decrease in sales for the duration of the Olympics.

Don’t let this be the end of your company, contact Beer & Young today to see how they can help.  Beer & Young have many associates in the South East and South West regions who can arrange an informal chat with you either on the telephone or in person.

Failure of Project Merlin

Beer & Young senior associate Michael Morley Smith comments that he is not surprised that Project Merlin appears to have failed. Despite the agreement to boost lending, the number of small businesses using a loan or bank overdraft has fallen over the last two years. The top 5 banks, including Royal Bank of Scotland, Barclays, HSBC, Lloyds and Santander missed their agreed targets for last year. 

Overall lending however is still above target, showing that money is going to large businesses, rather than small and new businesses that require it. The Merlin banks decreased small business lending by 6% (falling short of the SME lending target of £1 million) although promising to grow it, leaving jobs and growth hanging in the balance.

Michael further comments “we operate the largest and most active network of investors in the UK. I talk with investors almost every day, they are serious about helping small businesses and have capital to invest”.

Business Confidence in Negative Territory for 2012 First Quarter

Over a thousand businesses were monitored to put together a survey which shows that business confidence at the start of 2012 is in negative territory. The Business Confidence Monitor (BCM) is an indicator for growth and can make predictions regarding the recession and pick up on early warning signs.

Two declining quarters of gross domestic product declining could be the indication that the UK economy is currently be in the midst of recession.

In London, the Confidence Index has dropped 33.8 points since quarter 1 2011.

The findings from the Business Confidence Monitor this quarter would suggest that after the record fall in the last quarter business confidence hasn’t declined further, however businesses do remain cautious about the UK’s economic outlook. Businesses are bracing themselves for a long road to recovery as financial performance indicators are increasing at a very slow rate.

If your company is in financial crisis it doesn’t have to be the end, contact Beer and Young today for a free no obligation chat and find out what they can do to help.

Madhouse Possible Administration

It is always interesting to see what is going on in the market place. This story from last week has caught our eye.

Everyone seems to have heard of Madhouse. The Budget fashion chain has put 700 jobs at risk upon entering administration. They declared a net loss over the 12 month period ending January 2011 of over £195,000. It was reported that the company directors paid themselves £16,000 more in the last accounting year before the chain collapsed.

The lead administrator for the company has also handled the cases of Poundline, Retail Scotia and UK travel Shop in the last few months and is a known name in the retail space. Maybe if they had have approached Beer and Young they could have raised the money they required to save the business.

Company insolvencies have increased and experts predict this to continue

Company insolvencies have gone up by 7.4% in quarter 4 of 2011, compared to the same period in 2010.

Compulsory liquidations increased by 14.1% between quarter 3 and quarter 4 of 2011, however, increased at a rate of 16.1% compared to the same period in 2010. Company Voluntary Liquidation (CVL’s) have risen by 3.4% based on the same period in 2010.

Other corporate insolvencies have registered a 5.3% increase between 2010 and 2011’s levels, including receivership's, administrations and Company Voluntary Arrangements (CVA’s).

The figures show that in 2011, on average, one in 138 companies were liquidated.

Do not let things reach the stage where your company would have no other option, give companies like Beer & Young a ring today to discuss private investment.

Struggling Business Owners Considering Returning to The Work-Place

A report published this week reveals that one in four small business owners are planning to get out of business and back into employment as trading conditions are very tough, whereas others are scaling down their enterprise and seeking part-time work to supplement their income. The report also reveals that one third of small business owners have lost their drive and enthusiasm.

According to the report, a significant proportion of small and medium-sized business owners are thinking of returning to work with 50% saying that it is too difficult to be a business owner in the current economic climate.

A quarter (26%) of SME owners admit they no longer enjoy running their business, with a third (32%)  having stated that they no longer have the initial enthusiasm when starting teir venture. As a result, the report also reveals that one in four (25%) SME owners are considering returning to the workforce as an employee.

A contributing factor may be the reduction in the money they have been able to take out of the business for personal use. Half of those (50%) surveyed have reduced the money they withdraw, over the past 2 years, with restaurant owners suffering the most. Nearly three-quarters (73%) of businesses in the catering sector have experienced a marked decline in the amount they withdraw from their business - with almost a third (29%) reporting a drop of between 20-25% and 10% reporting a drop of up to 50%.

There appears to be very little improvement in sentiment in 2012. More than one in three (35%) believes there is an increasing risk of an economic "double dip" recession, a further increase compared with 28% when the same question was asked in June 2008.

However, at Beer and Young we have been very successful at raising capital for struggling businesses; see our website for case studies.