The Turnaround Funding Blog

Struggling Business Owners Considering Returning to The Work-Place

2012-02-02T13:43:00.002Z

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.

Beer & Young Director, Nick Young named as one of the “Power 100”

2012-01-11T19:50:00.002Z

Sponsored by Insolvency Today, in partnership with Willis, the 2011 Power 100 list recognises

key people who are making the most demonstrable impact on and positive change within the insolvency profession.

With well over a decade of experience in a range of insolvency, recovery and turnaround work, Nick also accepted the “Business Rescue Funder of the Year” award for the second year running at the Insolvency & Rescue Awards held in October.

HMRC Leaps into Action

2011-11-21T12:04:00.000Z

HMRC has been given substantial funding with the aim of raising an additional £7 billion each year – so unsurprisingly if has been very busy with a wide range of initiatives.

A new approach for HMRC is to use task forces for an intensive burst of activity targeting specific business sectors and locations where there is a high risk of tax evasion. The first task force focused on the restaurant trade in London, with Scotland and the North West to follow. The most recent task force tackles VAT abuse in London’s fast food outlets, with nine further task forces planned for 2011/12. The latest software makes it very easy for HMRC to compare tax returns of different businesses, and to identify those that appear not to be doing so well.

HMRC is following up the Plumbers Tax Safe Plan with the VAT initiative, aimed at businesses that are trading above the VAT turnover threshold of £73,000, but are not VAT registered. HMRC is writing to more than 40,000 businesses to make them aware of the initiative. Businesses have until 30 September to notify HMRC of their intention to take part, and VAT registration is then required by 31 December. A penalty of just 10% is likely to be charged on VAT that is paid late.

It has been estimated that last year HMRC investigated more than 9,000 inheritance tax valuations. Many estates are only subject to tax because of the value of the deceased person’s home, and it is often a family member who takes on the task of administering the estate. With a 40% tax rate, if can be tempting to value property below its true worth. However, an undervaluation of, say, £25,000 will mean additional tax of £10,000 and a penalty of up to 100%. It is therefore advisable to obtain several valuations and to have property professionally valued.

Finally, in an effort to collect tax as quickly as possible, HMRC has been sending letters to taxpayers informing them that HMRC will be collecting and selling their goods in lieu of outstanding tax. However, in many cases nothing is actually owed or payment plans have already been agreed.

Business confidence tumbles as economy trembles

2011-11-14T10:48:00.002Z

Business confidence has plummeted by a record amount as fears persist the economy is set to contract in the final quarter this year.

The BCM Confidence Index collapsed from +8.1 in the third quarter to -9.7, according to the latest figures from ICAEW.

The index – a close indicator of GDP growth - is now at its lowest level since the nadir of the 2009 recession, fuelling concerns the economy will shrink by some 0.2% in the final quarter.

Growth for 2011 would therefore be 0.9% - a sharp drop on the 1.7% projected earlier this year.

The index revealed confidence across all business sectors has fallen, with just energy, water and mining remaining in positive territory at +2.3.

Weak property sector

The property sector is in the weakest position with confidence tumbling to -18.7, followed by banking, finance and insurance with -14.6.

Michael Izza, Chief Executive of ICAEW, said: "In the first nine months of the year, businesses have played their part in supporting economic growth.

"Many are proud of their success against a backdrop of a very slow and protracted recovery. Yet they are becoming increasingly worried about the immediate outlook and the risk of a double dip recession.

"They are looking to the Government which now needs to take urgent steps to restore business confidence and to show that it understands the need to rapidly change the mood that the business community clearly feels."

Turnover and profit growth expectations have now declined for two successive quarters, which has been compounded by a steep drop in capital investment growth expectations.

Headcount freeze

In total, more than three-fifths of UK companies are operating below capacity with the number of new employees expected to increase by just 0.9% as companies refrain from taking on new staff.

One ray of light was the BCM predicting – in line with the Bank of England – that the inflation rate will fall in 2012.

UK SMEs pessimistic about economy

2011-11-05T09:32:00.002Z

Nearly three quarters of small businesses believe the UK economy will re-enter recession in 2012, according to new research from a credit reference agency.

In a sign that business confidence is still very low amongst UK small and medium-sized enterprises (SMEs), 73% of those polled by researchers anticipated that another recession was on the horizon, despite official figures revealing growth in the economy in the last three months.

Over 90% of small businesses also argued that the government should do more to encourage banks to lend to them, according to new research from credit reference agency, while only 8% of credit managers polled believe that the establishment of an SME bond market by the government would help businesses access funding. Over a third (38 per cent) predicted that such a fund will have no impact on firms seeking funds for growth.

Difficult Times for SME’s

2011-10-27T13:49:00.002+01:00

Are these difficult times for SME’s – you bet they are! We are witnessing a significant increase in dialogue with business owners struggling with cashflow and needing to look at external support to relieve the pressure. Retailers particularly have been suffering, and it’s clear the flow of money has slowed over recent months across many business sectors.

The good news is that our investor network remains active and keen to look at providing capital quickly for the right business.

Typically we are introducing an average of four different investors to each client – an achievement in itself. That’s not to say that raising new capital is easy – far from it – however if business owners can make a compelling case of a brighter future, then we can normally offer a positive solution.

We are always happy to offer a professional view on what can be achieved, at no cost or commitment. Please call us if you know of a business in need; the earlier conversations take place, the better the chance of delivering capital to your client’s business.

FRAUD

2011-10-14T13:16:00.002+01:00

It has come to our attention that Beer & Young’s good name and reputation is being used by fraudsters. We take this matter extremely seriously and we’re doing everything we can to resolve this issue as quickly as possible. Please note that Beer & Young Ltd and its Associates are in no way affiliated with Eilif Johnson Capital, EJC Capital, EJ-Capital or any other name in which these fraudsters are operating.

Business Rescue Funder of the Year 2011

2011-10-12T15:24:00.003+01:00

We are delighted to announce that Beer & Young have won the ‘Business Rescue Funder of the Year’ award for the second year running.

The Insolvency & Rescue Awards is the biggest annual event in the turnaround industry. 550 people attended the gala, hosted at London’s Lancaster Hotel. Entertainment was provided by comedian Stephen K Amos who enlivened proceedings with a great set prior to the winners’ announcements.

Nick Young commented: “Winning the key Business Rescue Funder award two years on the bounce is great news and testament to the quality of the entire team at Beer & Young. I am grateful for their efforts and look forward to continuing this excellent work through 2012.”

Insolvency & Rescue Awards This Week!

2011-10-03T12:09:00.002+01:00

Finalists for the 4th Annual Insolvency & Rescue Awards were revealed back in August and finally the event has arrived! This Wednesday, over 500 industry professionals will come together for a night of celebrations as once again turnaround specialists are recognised and rewarded for their excellence and contribution to the recovery sector throughout the year.

Beer & Young will be there defending their title as ‘Business Rescue Funder of the Year’ and also as finalists for the ‘Business Rescue of the Year – sub £20 million turnover’ category.

The event is being held at the prestigious London Lancaster Hotel.

An SME’s Guide to Private Investor Funding

2011-09-26T20:24:00.002+01:00

As owners and senior managers of UK SMEs look ahead to the final quarter of the year and beyond, they face some serious challenges
.
With the latest figures showing that banks have once again failed to meet agreed targets for lending to small businesses, they can’t expect to receive much help from traditional sources.

Private investor funding offers hope for stressed small firms.

This free guide considers how SMEs can access the funding they need to survive and succeed in the future. Just click on the link below:

https://www.rapidrequest.co.uk/4/Default.aspx?95186.HWDSZIO8.1291960

Brits spend £9 billion every month paying off debt

2011-09-21T14:19:00.002+01:00

Research from MoneySupermarket.com reveals one in four people are using over 40 per cent of their wages each month just to pay off non-mortgage debt.

This means a large proportion of the British public are eating into their available income on a regular basis, leaving less to fund rising bills and spiralling living costs.

The MoneySupermarket research showed the average amount of monthly debt per person is £322, a whopping 25 per cent of the average monthly income for a UK adult, which stands at £1,288.

The research also found eight per cent of people said they spent over 80 per cent of their wages repaying debt, highlighting how stretched the nation's finances are at the moment.

Men hold a greater proportion of personal debt (excluding mortgage) of £7,944 on average, when compared to women who owe over one thousand pounds less at £6,739, fifteen per cent less than their male counterparts.

Tim Moss, head of loans and debt at MoneySupermarket.com said:

"With the cost of living continuing to rise, consumers are feeling the squeeze on their wallets more than ever. It's therefore worrying to see such a high number of people needing to use so much of their income just to service existing debt.

"However, making the most of every pound really does count when it comes to the end of the month, and it's vital that those needing to repay debt are doing so using the best method.

"For someone with credit card debt, it is vital regular monthly payments are maintained, as a late or missing a payment could result in being charged fees or losing any promotional rates.

"Setting up a direct debit helps consumers avoid missing payments and forking out significantly more than expected in interest payments and fees."

The research found that Londoners have the highest amount of personal debt in the UK, owing £8,478 on average, compared to those in Yorks & Humber, who owe £5,796.

However, those in London only use 22 per cent of their wages on average in paying off this debt, while Yorks & Humber dip into 28 per cent of their wages to repay debt.

Tim Moss continued:
"Consolidating debt payments can be a useful process for stretched consumers, either through a credit card or a personal loan, depending on their situation.

"Interest free balance transfer cards work well for those transferring borrowing smaller amounts, and are confident they can pay back the balance within the promotional period.

"Barclaycard for example offers 22 months interest free on balance transfers on its Platinum Credit Card - great for those looking for some financial flexibility and reduce their outgoings.

"Personal loans are also good alternative option as they offer a fixed monthly repayment amount over a fixed term. There are plenty of competitive options available at the moment, including Alliance & Leicester and Sainsbury's Finance personal loans, which have a current headline rate of 6.3 per cent for borrowing over £7,500, over a period of five years.

"However, the best credit card and loan deals are generally reserved for those customers with a good credit rating so it is worth checking your credit file before you apply.

"The golden rule for consumers is not to borrow money unless it is absolutely necessary. Anyone feeling the pinch needs to go through their finances making sure monthly outgoings are covered by what's coming in each month.

"For those seriously struggling to keep up with payments, I would advise seeking debt advice from one of the free debt advice charities who can help them get their finances back on track.

Toy company that owns the rights to children’s favourites Mr Men and Noddy to enter administration

2011-09-06T10:38:00.003+01:00

The creditors of Chorion are preparing to place the company into administration just a week after the departures of its chairman, the Labour peer Lord Alli, and his deputy Viscount Astor.

It is understood that Chorion’s owner, the private equity firm 3i, has failed to find new funding for the company and is set to opt for administration because it stands to lose its £86 million investment into the business.

The company, which also owns the rights to the Agatha Christie series of crime novels, breached its covenants in March this year and has simultaneously failed to come to an agreement with creditors, which also include Lloyds Banking Group, on a refinancing package.

It was rumoured that 3i and Chorion were holding 11th hour talks with private equity houses in a bid to find fresh lines of capital, but a final deal could not be struck.

According to its most recent sect of accounts, for the year ending March 2010, Chorion has debts of around £70 million and annual interest payments of £35 million.

For the same period, the company’s earnings before interest, taxes, depreciation and amortisation of £14.9 million, while revenue reached £51.7 million.

Global economic turmoil damaging business confidence

2011-08-31T09:55:00.002+01:00

The level of business confidence across the UK has fallen to its lowest level since the UK was still in recession, according to a national study published today.

The joint survey, by an accountancy firm and the Institute of Chartered Accountants in England and Wales (ICAEW), shows a widespread decline in confidence as global economic turmoil has impacted businesses’ future plans.

The UK Business Confidence Monitor (BCM) also shows that an increasing number of businesses see tax and red tape as major challenges, with 40% believing regulation is a greater burden than 12 months ago.

The monitor takes a measure of confidence among business owners and this index has fallen from to +8.1 in the third quarter of 2011, from +13.7 in the second quarter, and is now at its lowest level since the second half of 2009, when the UK was still in recession.

The confidence index has been on a downward trend since the first half of 2010.

Business owners who took part in the survey bemoaned the lack of progress to make it easier to do business in the UK.

Four in 10 firms, told the survey that regulatory requirements now pose a greater challenge than 12 months ago, up from 33% in the same quarter last year.

Despite the introduction of a one in, one out rule, for business regulation and a cut in corporation tax from 28% to 26% in April, many British firms still feel swamped under bureaucracy and red tape.

The BCM also brought to light that many firms are seeing turnover and profit growth weakening, forcing them to revise down future expectations.

This follows expectations that the Office for Budget Responsibility will revise down its own growth forecast of 1.7% for the current year in its forthcoming autumn statement

Overall, the survey showed that a positive trend in financial performance for many businesses has started to falter.

Average turnover growth for businesses who took part in the survey, for the 12 months to the third quarter of 2011, stands at 3.6%, while average gross profit growth is reported at 3.1%.

Insolvency News reveal the Shortlist for the Fourth Annual Insolvency & Rescue Awards

2011-08-18T21:12:00.002+01:00

A record number of entries were submitted and the judges will soon be deciding the winners for the profession's most prestigious awards scheme.

The awards will be held at the Lancaster London hotel on October 5th, which will feature Edward Davey, the minister with responsibility for insolvency, as keynote speaker.

Beer & Young are once again finalists in two categories, they will be defending their title as ‘Business Rescue Funder of the Year – Broker / Equity’ and are also contenders for ‘Business Rescue of the Year - sub £20m turnover.’

HMRC to suppress time to pay statistics

2011-08-12T10:26:00.002+01:00

HMRC has confirmed that July’s statistics on time to pay, which reveal that £1.02bn of taxpayers’ money remains outstanding under the scheme, will be the last to be published.

The most recent figures on time to pay, provided by HMRC’s business payment support service, show that £7.71bn in total has been deferred by businesses with cash flow problems, although £6.69bn has been repaid.

The figures show that a total of 444,000 time to pay agreements have been made since November 2008, although the number of deferrals have been in decline since late 2009.

Just over £1bn remains outstanding, of which around £650m is overdue, but the insolvency profession and the public will be left in the dark over these levels after HMRC decided not to publish them in future.

The revenue ran a six-week consultation on the figures earlier this year, but only had two responses, one internally and another from the Treasury. After it closed, HMRC decided that it will stop publishing the statistics after July.

No press release was issued as HMRC did not view it as “high profile” enough, and none of the RPBs or the trade body R3 was made aware of the consultation.

R3 president Frances Coulson said: “Time to pay has played a vital role in preventing the spike in corporate insolvency numbers that usually follow the end of a recession, and we are concerned to learn that HMRC will no longer publish the official statistics on this from July. We believe they are in the public interest.”

A spokesperson for the Insolvency Practitioners Association said: “It does seem that the IPA was not approached about this consultation. It is a little surprising that the HMRC representatives that spoke about time to pay at the IPA conference in April 2011 also did not mention it.”

A spokesperson for the Institute of Chartered Accountants in Scotland (ICAS) said: “ICAS was not aware of the consultation and we are in agreement that the stats would be useful for the industry.”

A spokesman for HMRC said: “Time to Pay should be a short term aid to businesses. Repeated requests may be a sign that the business is no longer viable. It is not fair if HMRC give preferential treatment to some businesses by giving them easier terms.

“Therefore, given that a repeat request is more likely to be refused it is entirely understandable that the number of refusals is increasing as a percentage of requests made.”

5,179 firms in critical condition

2011-07-29T10:37:00.002+01:00

A total of 5,179 companies in the UK were facing critical problems in the second quarter of this year, representing liabilities of nearly £60bn, according to the latest Red Flag report.

The report, issued on 29^th July, shows a 12 per cent rise in the number of companies in a critical financial condition compared to the first three months of 2011.

Travel and tourism, hotels and accommodation and retail sectors continue to suffer with further decline. The number of companies suffering critical financial problems in the hotels and accommodation sector increased 47 per cent and for the travel and tourism industry, this figure spiked by 31 per cent. The retail sector also saw a 17 per cent increase.

But while these industries remain highly vulnerable, the report shows a 48 per cent fall, quarter on quarter, in the number of businesses facing ‘significant’ financial problems. This fall is an apparent glimmer of good news, but could be indicative of weaker businesses actively moving from significant to critical financial problems - and ultimately to insolvency, as well as seasonal factors which typically impact on the first quarter figures.

HM Revenue and Customs is taking a more robust stance. As the level of support from the revenue is gradually decreased, it is increasingly evident that businesses using the scheme are now struggling to cope with current trading conditions. Many companies which made use of the time to pay scheme have failed to achieve a turnaround and are now seeking a second deferral agreement with HMRC.

However, the government is finding it difficult to give second chances and the number of winding up petitions issued by HMRC in the second quarter of 2011 has more than doubled since the first quarter.

Property also showed no signs of improvement, according to the report. The level of companies in this sector showing signs of critical distress views was up by 42 per cent in the second quarter compared to the first.

There was also a 41 per cent rise in the haulage and logistics sector during the same period.

JULY 2011 NEWSLETTER

2011-07-29T10:01:00.002+01:00

Welcome to our Summer Newsletter.

The first half of 2011 has been a challenging one for many involved in the SME community. Small businesses are struggling to generate good cashflow and finding it very hard to access new capital from their banks. We see many business owners who are behind with payments to HMRC, most recently corporation tax bills, and finding a less than sympathetic ear from the tax collectors.

Paradoxically, we have an ever increasing network of private investors who are seeking the right opportunities to invest capital. The vast majority of these individuals are self-made entrepreneurs who have exited their core business and have an appetite for backing established trading businesses who have a need for capital.

We’re finding ourselves able to generate significant investor interest for almost all of our clients; holding meetings between clients and investors often within days of being taken on. Over two thirds of our clients receive offers of funding, which is a testament to the quality of our investor network.

The tricky bit, of course, is managing expectations on both sides. Agreeing terms, valuations, keeping DD to an appropriate level, not allowing time to drift and maintaining deal momentum are all obstacles that need careful management.

We’re always keen to talk with business owners who have a need for capital and are comfortable with an equity funding solution. Please don’t hesitate to contact myself or a colleague at any time.

INDUSTRY AWARDS

It’s that time of year again, the cutoff date has now passed and entries have been submitted for this year’s Insolvency & Rescue Awards.

Now into its fourth year, The Insolvency and Rescue Awards is the biggest event in the insolvency and turnaround industry, where professional excellence and outstanding achievements are recognised.

We are back this year to defend our title as ‘Business Rescue Funder of the Year’. We have also entered a second category to highlight our achievements since the last awards ceremony with our entry for ‘Business Rescue of the Year’.

Finalists are due to be announced in the coming weeks and the awards will be held on 5th October at the Lancaster London Hotel.

Let’s keep our fingers crossed!

BIRTHDAY CELEBRATION

Now into his seventh year with Beer & Young, Senior Associate Michael Morley-Smith celebrated his 65th Birthday this month. Trained as an accountant, Michael has intimate knowledge of small business practice as well as company insolvency rules, and has become one of our in-house technical experts for company turnaround.

Michael is a huge fan of Formula 1 and cricket – we’re looking forward to a day out at the Rose Bowl to see England/India in September.

Congratulations on reaching this milestone. We expect several more years’ effort before we hand over the brass clock!

20 retail stores are closing every day

2011-07-15T15:36:00.002+01:00

Britain’s beleaguered retailers closed an average of 20 stores a day between January and the end of May, according to a report from a research business specialising in retail.

The report also revealed that across multiple retailers in 300 town centres, clothes, shoe shops and jewellers have been amongst the hardest hit in 201 whilst supermarkets, convenience stores and cafes bucked the trend by showing growth in the first half of 2011.

It would appear that the combination of rising inflation and dented consumer confidence has led to people increasingly trying to find the best deal online. This has made life difficult for store-dependent high street retailers who have seen a drop in sales and reduced footfall.

Matthew Hopkinson, director of the research company, said that retailers now require fewer stores in fewer locations but with larger floorplates.

He added: “The negative trend seen here is, however, offset by the supermarkets and their move into convenience formats, along with the new opportunities presented to charity shops, pawnbrokers and betting shops.”

The companies analysis shows that Rochdale and Lancaster were the hardest hit towns in the north west. In the north west, 17 womenswear and childrenswear outlets closed and 12 bars, clubs and pubs closed, while there was a growth in charity shops and pet shops.

Retail bloodbath: IPs warn it's survival of the fittest

2011-06-30T17:35:00.002+01:00

After household names including Habitat, Jane Norman and Thorntons all either collapsed into administration or announced store closures, insolvency specialists have warned that the retail sector will continue to endure pain this year.

The news also followed a report from the British Retail Consortium (BRC) that said retailers were being hit by weak demand and surging prices for commodities and property, while employment costs remain high.

Brian Green, a restructuring specialist at KPMG who worked on the company voluntary arrangements (CVAs) for retailers Blacks and JJB Sports, said: “For the retail industry it is now a question of survival of the fittest.

“Companies with healthy cash flow, low debt levels and sustained customer demand will survive; conversely retailers facing a cash squeeze, large debt burdens, faltering sales and - particularly those with expensive and large store portfolios - will face a tough time.”

Green highlighted the most recent set of figures published by the Insolvency Service for the first quarter of 2011. This showed that retail administration appointments jumped by a staggering 55 per cent, with retail CVAs increasing by 30 per cent.

He added: “With the cushioning effects of suppressed interest rates having worn off, persistently worsening consumer spend is starting to crystallise in business failure. Unfortunately the fundamental economic indicators suggest that retail insolvency figures will continue to worsen this year.”

Green’s comments follow news that HomeForm, owner of KitchensDirect, entered administration and an announcement from TJ Hughes that it may have to appoint administrators. This comes on the back of HMV, Waterstones and video games retailer Game all reducing the number of stores.

Last month the BRC said numbers from the Office for National Statistics showed the weakest growth in sales values so far this year.

BRC economist Richard Lim said: “After the feel-good boost of April, which saw retailers benefiting from sunny weather and bank holidays, May was a return to reality. Consumers are overwhelmingly cautious about their personal finances and are reluctant to spend, particularly on big ticket items.”

R3 president Frances Coulson said the recent last quarter day for rent in June was the catalyst for many retailers’ collapse.

She added: “The high-street and the way consumers shop is changing and the rate of change has been sped up by the protracted economic downturn. The most significant change is consumers shift to the internet.

“Close to a third (31 per cent) are now shopping online more and this has definitely impacted on those retailers that have a heavy high-street presence.”

HMRC: £650m overdue under time to pay “is collectable”

2011-06-24T14:47:00.002+01:00

HMRC was responding to figures which revealed the taxman was owed £970m by businesses under time to pay, and that £650m of this was overdue, while £320 is due for payment within an agreed deadline.

It was claimed that some businesses have deferred payment of their tax debts as many as four times under the scheme.

The latest figures emerged after a parliamentary question was put to HMRC from Lord Newby, co-chair of the Liberal Democrat Treasury parliamentary policy committee. Lord Newby asked how much money remains outstanding under the business payments support service, under which the time to pay operates.

Lord Newby was told that 395,400 time to pay arrangements have been made, involving £6.8bn of tax, of which £5.87bn has already been repaid.

Meanwhile insolvencynews.com has discovered that HMRC will not be publishing any more figures on time to pay after July.

A spokesman for HMRC said a consultation on continuing to publish the figures was launched earlier this year, although no press release was issued because the subject was not deemed “high profile” enough.

The consultation received no responses other than one from the Treasury and one internal response from HMRC. HMRC then decided that the July 2011 release of time to pay figures will be the last.

HMRC added that the majority of businesses that have entered into time to pay arrangements are “fundamentally viable” and are still in business “in no small part” due to the practical support provided by its arrangements.

The spokesman for the authority added: “Around 90 per cent of the tax rescheduled has been paid and this, coupled with the enormous benefits that small businesses deliver to the country through tax revenues, jobs, and long term expansion, strongly justifies our pragmatic approach.”

HMRC said the £650m is collectable and will either be subject to further time to pay when appropriate, or to its normal debt collection procedures.

Those arrangements which have not been paid in accordance with their schedules will have undergone standard HMRC recovery and enforcement action.

This will involve further recoveries, but HMRC said it is not possible to identify these separately as being related to earlier time to pay agreements.

HMRC’s spokesperson added: “Time to pay is designed to help businesses with short term cash flow difficulties and we are well aware that multiple applications may be evidence of a deeper structural problem with implications for the long term survival of the business.

“So when a business makes multiple applications we probe to ensure the request is driven by a short term cash flow problem, rather than a deeper and insurmountable one.”

Private Investor to the Rescue!

2011-06-21T08:57:00.000+01:00

This month we’re offering two short case studies highlighting recent work we’ve carried out for clients. As you know we are set up as a transaction based business. We rely on referrals and will never seek to overlap work that our introducer can ably carry out. That said we don’t believe there is anyone in the UK who so regularly delivers urgent capital to businesses as we do.

Talk to us if you know of a business that has a need for capital. Our network of investors is unparalleled in the UK numbering well in excess of one thousand high net worth individuals. We offer an honest and swift appraisal of any situation and we'll happily meet with the owners at no cost or commitment.

Interior Design & Consultants - Case Study

Our client provides high quality interior design and consultancy services primarily to the commercial market. The business owner has enjoyed success over a period of more than 20 years and has a customer list with a truly global reach. Post-recession, a number of client relationships have regenerated and an impressive order book has been built up.

In 2010 we introduced our client to investors and helped close the investment transaction. The investor concerned worked within the industry and this element was seen as crucial to the fit. Unfortunately, over a relatively short period of time, this relationship broke down and we were engaged for a second time to find a new investor.

In a very short timeframe, not only had we found and introduced a new investor – also an established individual within the trade, but we helped negotiate exit terms from the previous relationship. An amicable settlement was reached, leaving our client clear to enter terms with this new party.

"I was completely happy and satisfied with the service that we received from Beer & Young who clearly understood both parties’ needs and acted accordingly. They were always on the ball, reacted speedily to all situations and we are completely indebted to them for introducing us to an ideal investor partner enabling the business to survive and grow from a very precarious position and in addition complementing the investor’s business. I would have no hesitation in recommending Beer & Young to others".

Wholesaler / Distributor – Client Testimonial

As you can see from the testimonial below, our client had a serious issue with HMRC

Our business had been re-financed but had significant historic arrears with HMRC. We reached the point where HMRC moved our case to the solicitors’ office who would then issue a winding up petition. We called Beer &Young who swung into action straight away. They were able to persuade HMRC to take an immediate step back, giving us the chance to re-submit proposals for repayment. Beer & Young managed the whole process for us and we’re delighted that they were able to negotiate workable terms for us. I recommend any business with HMRC problems to contact them. They will act immediately, clearly have an excellent reputation within HMRC and are able to deliver results. Thanks again for your help.

AW, Director

Helping business owners deal with tax arrears

2011-06-14T16:28:00.000+01:00

For this month’s news story we thought we’d highlight our non-core, but extremely important, area of our business – namely helping business owners’ deal with tax arrears.

Over the past 10 years or so we’ve been dealing with HMRC in their various forms, and since early 2009 when the recession started to bite we’ve been really active in this area. Since this time we’ve helped many dozens of businesses negotiate or re-negotiate workable payment terms with HMRC. We’ve offered a couple of client testimonials below. Before we move onto these comments, it’s worth offering a few pointers to business owners and finance directors.

1. Don’t ignore the letters that arrive, once your case has become live, it won’t go away by ignoring it.

2. HMRC have been very helpful in offering time to pay arrangements. Whilst these are not coming to an end, there is value to you in having a third party negotiate on your behalf as the scheme has been tightened significantly.

3. There is a point where the taxman loses patience with the business owner or their management and begins to take action. This is not the end of the road, but a realisation that you must take advice and engage with a specialist firm.

If you are at the early stage of arrears, or about to miss your first payment, be it PAYE or VAT, it is important to communicate effectively with the relevant department.

Here are some recent testimonials demonstrating the quality of Beer & Young’s work in this area. Please contact us to talk about any issues you have.

Wholesaler / Distributor

AW, Director

Manufacturer of Specialist Fastenings

“Before I met with Beer & Young, my Company was in serious financial difficulties. I had been through a poor trading period and our tenant had recently gone bust. I

had creditors chasing me and we had arrears of both PAYE and VAT. The sales finance company were restricting our facility and I was being advised to liquidate the business, which was the last thing I wanted to do. Beer & Young suggested the Company propose a CVA and on my behalf they talked to HMRC, the sales finance company as well as some key trade suppliers with the result that the CVA was agreed. Thanks to Beer & Young, my company has survived the crisis and now sales have recovered to record levels I am confident my business has a future.”

Owner

Six million people behind on bills, says R3

2011-06-14T15:34:00.000+01:00

Around six million people are behind with their bills and payments as record numbers experience financial distress, according to insolvency trade body R3.

About eight million people are due to go into their overdraft this month, with two million believing that they will go into an unauthorised overdraft position, according to research published in R3’s latest Personal Debt Snapshot report.

The study also finds that 36 per cent of people believe that their financial situation will worsen over the next six months, while 32 per cent of people are now saving less than they used to – this equates to 15 million people.

R3 president Frances Coulson said: “These figures make for worrying reading. It is clear that many have found themselves in a position whereby they have to go into and often exceed their agreed overdraft in order to keep on top of their bills and debt repayments. “Unfortunately, more often than not this leads to bank charges, which further deplete the amount available for bills. It’s a catch-22 situation which can result in debts snowballing.”

Coulson said a sudden change in circumstance such as redundancy tends to trigger insolvency.

She explained that with many people effectively experiencing a pay cut as living costs continue to rise, it is not always possible to set aside money for a “buffer”.

Coulson added: “Our research shows that 19 percent of people now set a budget. This is definitely a positive step as, for those who are struggling with their debts, a budget is a key tool which allows you to clearly compare how much money you spend against your income. This will help to identify if any savings can be saved and where.”

Project Merlin fails to hit target

2011-06-03T15:05:00.000+01:00

Bank loans to small businesses fell £2.2 billion short of their target for the first quarter of 2011 under the Project Merlin agreement, according to official figures. Loans to small and medium-sized enterprises (SMEs) from the Merlin banks totalled £16.8 billion for the first three months of this year, falling short of the £19 billion lending target set out in the Merlin agreement between the banks and the government.

The shortfall was attributed to a lack of demand from SMEs, according to a statement released by the British Bankers’ Association (BBA) on behalf of the banks signed up to Project Merlin.

HMRC in £1.5bn debt collection tender

2011-06-03T15:04:00.002+01:00

HM Revenue and Customs has selected 10 debt collection agencies (DCAs) to work placements valued at between £500 million and £1.5 billion following a tender process.

The 10 agencies selected are in line to share between £30 million and £70 million in fees from the two-year deal, were notified of their selection on May 20, following what one DCA chief executive called “the largest tender the industry has seen in 20 years”.

Probes into bank failures to be made public

2011-05-25T13:59:00.000+01:00

The Prudential Regulation Authority, the new financial services regulator, will have greater powers over the banks and will make public its investigations into banking failures.

Hector Sants, chief executive of the Financial Services Authority, which will be replaced by the Prudential Regulation Authority (PRA), said the new agency will also be given more powers to block bonuses and dividend payments by UK banks.

The new powers will come under a more intensive supervisory approach that has been adopted by the FSA since the financial crisis.

Sants said the PRA will utilise powers to block bonuses if it believes that such payments break new rules on risk management and capital adequacy.

His comments emerged as the Bank of England and the FSA published a joint paper, entitled The Bank of England, Prudential Regulation Authority – Our approach to banking supervision, which sets out how the PRA will supervise banks, building societies, credit unions and investment firms.

Hector Sants, PRA chief executive designate, said: “The PRA’s purpose is fundamentally different from that of previous regulatory regimes and will lead to a significantly different model of supervision to that which was in use pre-2007.

“In designing this new model we have incorporated both the lessons learned from the last financial crisis and those from firm failures of the past.”

He said the new regulatory model will be based on forward looking judgements and will be underpinned by the fact that the PRA has a single objective: to promote the stability of the UK financial system.

Andrew Bailey, FSA director of UK banks and building societies and PRA deputy chief executive designate, said: “Maintaining financial stability is an objective in public policy which we should all value highly. We have seen what happens when we lose it.

"But achieving and maintaining financial stability does not mean that we have an industry in which no-one can fail."

Angela Knight, chief executive of the British Bankers’ Association (BBA), said the trade body supported “sensible reform” and the formation of the PRA to “take forward the lessons we have all learned.”

She added that the new body needed to attract high calibre staff as supervisors.

Small firms may miss out on £2.5bn fund

2011-05-25T13:58:00.000+01:00

Most small businesses seeking affordable finance will miss out on a new £2.5bn equity fund launched by the UK’s largest banks, a business lobby group has warned.

The Forum of Private Business said the criteria to access the Business Growth Fund, launched by banks and the British Bankers’ Association (BBA), will put many businesses off from using the scheme.

The Business Growth Fund allows banks to take stakes of between 10 per cent and 50 per cent in high growth businesses, with turnovers of between £10m and £100m, in return for investments of £2m to £10m.

But according to the latest figures from the Department of Business, Innovation and Skills (BIS), just five per cent of small and medium-sized enterprises (SMEs) have funding requirements of £1m or more, with just under a quarter (23 per cent) needing between £10,000 and £24,000.

The FPB said a paltry one per cent of SMEs are seeking equity finance (down from two per cent in 2006/2007), with most choosing not to sacrifice a stake in their businesses and preferring debt lending in the form of bank loans (40 per cent), and overdrafts (35 per cent).

The forum said it is concerned that the fund will not help the vast majority of firms struggling to find the cost-effective finance necessary to compete for new contracts, create jobs and drive economic growth.

FPB senior policy adviser Alex Jackman said: “The Business Growth Fund aims to bridge the clear gap in funding for high growth firms identified in the Rowlands Review back in 2009 and so is certainly a welcome step and one that is long overdue.

“But we cannot allow this to overshadow the real problem – the lack of affordable lending being made available by banks to start-ups and other small businesses – those that are not eligible to benefit from the fund.”

Jackman added: “There is a real danger that these firms will be left behind and that would be disastrous for the economy.”

Under the Business Growth Fund the banks are committing to provide £1bn of equity capital over three years and £1.5bn over 10 years.

Conceived as part of the BBA's taskforce last autumn, the fund was central to the Project Merlin deal struck between the government and major banks. The deal included an increase in lending to SMEs and restraint on bank bonuses.

Insolvency Service to tackle termination clauses

2011-05-20T10:03:00.000+01:00

This week we have attached an article that is relevant to many of our clients. The issue of keeping suppliers on board when re-structuring is an important one, however suppliers who “blackmail” clients during these times need to be deterred from doing so. Whether a new moratorium will be effective remains to be seen.

The Insolvency Service has confirmed that it will finally tackle termination clauses, under wider proposals to create a moratorium for firms which need debt restructuring.

Termination clauses, whereby suppliers can cancel vital contracts and therefore threaten a firm’s rescue plan, will be looked at as part of the Insolvency Service’s next stage of considering how to create a moratorium.

The Insolvency Service recently published responses from the profession to proposals for creating the moratorium.

The moratorium would provide viable businesses some breathing space, outside of a formal insolvency procedure, to restructure their debts successfully.

While publishing the industry’s response to the moratorium proposals, Edward Davey, the minister responsible for the insolvency regime, said: “There have been suggestions that a greater impact might be achieved by the restructuring moratorium were it also to tackle issues such as termination clauses.”

The minister also confirmed that responses suggested the moratorium could tackle “cram down” mechanisms, to reduce the power of small creditors to block proposals.

He added that there would be further talks with stakeholders to explore the level of support for addressing these issues and “the best way to do so.”

His comments follow a campaign led by the insolvency trade body R3 for a law change to stop suppliers threatening to cancel contracts, thereby preventing them from blackmailing insolvent firms which are trying to engineer a rescue plan.

R3 estimates that around 2,000 more businesses could be saved annually as a result of tackling these practices.

R3 president Frances Coulson said: “R3 has been campaigning vigorously on this issue as part of its Holding Rescue to Ransom campaign to stop suppliers taking unreasonable actions during an insolvency, thus sabotaging any potential rescue.”

The Insolvency Service, while providing a summary of responses to the moratorium plans, said the urgency of the case for introducing it was “not as great as previously thought.”

One of the key elements that will need to be refined is the powers and responsibility of who monitors the moratorium.

Both HSBC and Royal Bank of Scotland told the Insolvency Service that qualifying floating chargeholders should consent to the choice of monitor.

Views were split on whether to have an extra court hearing for the extension of a moratorium to cover the formal approval of a CVA proposal. The vast majority of respondents said the court should grant any extension of a moratorium.

Insolvency Service officials will now refine the moratorium proposals and consider in more detail the issues raised.

SMEs risk export losses through currency "knowledge gap"

2011-05-16T16:03:00.000+01:00

A "knowledge gap" about protecting businesses from currency fluctuations means British SMEs risk losing thousands of pounds on export deals, a new report has warned.

The study by American Express FX International Payments showed that despite belief in an "export-led recovery" being generally strong in the UK, 23 per cent of companies are actually looking to pull back on their international trade due to worries over volatile exchange rates and red tape.

Over half (56 per cent) of those who are losing confidence in exports cite the sharp fluctuations in the euro as their biggest concern.

American Express said the UK's top export markets - Germany, Spain and Poland - all use the euro and, without safeguards against the risk of currency volatility, the 55 per cent of SMEs that trade internationally could lose thousands.

It added that a company with an exposure of €300,000 over three months starting in October 2010 could have saved £19,745 if it had purchased an incoming forward contract rather than taking the spot price for the euro in January 2011.

However, despite the potential losses, 55 per cent of SMEs do not use such protection and 28 per cent have never even considered it.

American Express FX International Payments general manager, Rocco Magno, said, "After a tempestuous year for currencies, it's not surprising that currency fluctuations are the number one concern for SMEs trading internationally.

"Worryingly, these fluctuations are not only affecting confidence, but also the bottom line for SMEs due to a knowledge gap on how businesses can protect themselves from these fluctuations."

Liverpool came too close to collapse, says UEFA official

2011-04-28T16:56:00.004+01:00

Irrespective of your personal football leanings, this is an interesting turnaround story…

One of UEFA’s most senior officials has warned MPs that Liverpool Football Club came within hours of going into administration. William Gaillard, an adviser at UEFA, the governing body of football for Europe, told a parliamentary inquiry into the governance of English football that Liverpool was an example of why financial fair play rules have to be brought into the game.

Gaillard, one of UEFA president Michel Platini’s closest advisers, warned a committee of MPs that Liverpool had come perilously close to going under after Tom Hicks and George Gillett loaded it with debt, before the club was taken over by American firm New England Sports Ventures (NESV) company.

Gaillard said: “We’ve seen more than 80 clubs in Europe in 10 years going into administration.

“Leveraged buy-outs for many clubs end in disaster. Just take Liverpool where you have owners who came, contracted debt, bought out the previous owners and saddled the club with the debt.”

Gaillard told the inquiry that what brought Liverpool down was “two failed banks, one British, one American,” which had been nationalised. He added: “They suddenly found themselves being owned by two failed banks that had been taken over by governments – Royal Bank of Scotland by the British government and Wachovia by the US government.

"The club has now been rescued and thank God because it has tremendous heritage - but it was a close call."

UEFA's new rules are designed to force clubs to break even after an initial period of flexibility. They tighten up the access to the Champions League for clubs burdened with huge debts.

Gaillard cautioned against sudden massive investment by unpredictable and untrustworthy parties.

"We at UEFA feel if a person brings equity, that is much better sit than if he brings debt," he said.

Bars and restaurants top table of 'distressed' businesses

2011-04-21T12:57:00.002+01:00

There was a 15% increase in financial distress across all business sectors in the first quarter of this year, according to a large business recovery firm. The firm's Red Flag Report shows a 70% year-on-year rise in the number of businesses in the bar and restaurant sector showing signs of distress. Some 60% more businesses in the professional services sector were in a similar position. The firm commented that sectors relying on discretionary consumer spending were "beginning to show the effects of anticipated job losses."

Redflag report reveals: 186,000 firms in financial distress

2011-04-14T15:26:00.000+01:00

Just over 186,000 UK companies are experiencing significant or critical financial problems compared with around 161,000 in the first quarter of 2010, according to an Insolvency Firm.

The insolvency firm’s latest Red Flag Alert, published today, claims that a total of 186,554 firms are in financial distress, a 15 per cent rise from 161,601 businesses year on year.

The report also reveals how specific sectors are suffering: year on year, the number of businesses showing signs of distress is up by 68 per cent in the bar and restaurant sector; by 60 per cent in the leisure and culture sector and by 23 per cent in the sports and recreation sector.

Other sectors also experienced worsening condition from the last three months of 2010 into the first quarter of 2011.

The Red Flag Alert reveals that 25,031 businesses in the construction sector were facing significant or critical financial problems in the first quarter, a 31 per cent rise on 19,167 construction companies in trouble during the fourth quarter of 2010.

There was an 87 per cent rise in the number of professional services firms in difficulty, to a total of 15,526 in the first quarter, from 8,293 in the last three months of 2010.

There was also a 92 per cent rise in the number of bars and restaurants in financial distress, to 4,505 from 2,347 businesses in the fourth quarter of 2010.

The Executive Chairman of the insolvency firm, said: “The figures for the first quarter of 2011 show the number of UK companies facing ‘critical’ problems has risen year on year with significant increases across the leisure sector in particular.”

He emphasised that the sectors which rely almost entirely on consumer discretionay spending were suffering the most.

He added: “Compared with our figures for food retail which show little change, it seems likely that a fall in consumer confidence and spending power driven by anticipated job losses lies at the core of the leisure sector’s troubles.”

The Executive Chairman explained that another marked increase was evident in the professional services sector where the number of firms showing signs of distress was up by 61 per cent compared with the first quarter of 2010.

He added: “Over 15,000 firms in the professional services sector are showing signs of significant or critical problems - partly driven by a stale property and corporate deals market - often the drivers for an active professional services community.

“Compared with the first quarter of 2010 figure, of 9,620, it seems that firms which operate with a high fixed cost base are finding the current market conditions increasingly difficult as their revenues fail to recover and the scope for further cost reductions becomes more limited.

“High levels of legal actions taken against debtors indicate that creditors are attempting to maximise cash collection right across their customer base.”

UK Consumer Prices Index - February

2011-04-12T11:26:00.000+01:00

Some good news this week…

There is no doubt that businesses continued to struggle through the early months of 2011, but the fall in inflation for February can bring some relief to us all. UK Consumer Prices Index annual rate of inflation has fallen to 4%, down from 4.4% in February. The fact that inflation has fallen may at least buy the Bank more time before it has to see if the economy can walk on its own without the support of record low rates.

Private Investor Delivers Much Needed New Capital

2011-04-07T08:36:00.002+01:00

Many business owners come to us with a similar tale - a history of profits, but two years of recession has weakened the balance sheet, and they've suffered. 2011 brings a renewed opportunity for growth, but how do they fund this? Can't rely on banks...they have their own issues and are struggling to lend to SME's in today's climate.

Beer & Young specialise in raising capital urgently for businesses which have a need for capital. Our network of private investors is unmatched in the UK. Investment from private investors can be the answer: it enables the business to secure its immediate future and gives it the funds necessary to plan for growth and profits.

There are solutions to the funding problems facing many UK businesses - we are pleased to highlight another success in 2011. The names have been changed to protect the innocent.

Beer & Young were engaged to raise funds for our client, Product Promotions Ltd.

Established in 2000, Product Promotions achieved continuous growth until the late Noughties, at their high point achieving sales of £5 million whilst delivering excellent returns for the directors/shareholders.

The recession hit our client hard with many blue chip customers reducing their spend, the result of which put our client into a loss making position. Having traded through this period - under some duress - they were unable to fund the numerous new sales opportunities that had arisen as their customer base returned.

Beer & Young generated considerable interest from potential investors. We are delighted to report that after the usual period of due diligence, one investor has injected £400,000 of new money into the company.

This investment has given PP a much needed boost to the working capital position and balance sheet. Their bankers can relax somewhat with over £500,000 of debt still to be serviced. The danger of looming business failure has now gone.

We wish both client and investor well for the future.

Private Equity and Business Insolvency

2011-03-31T11:01:00.000+01:00

Nicholas Young, MD of turnaround specialists Beer & Young, noted with interest the comments in this week’s edition of insolvency news;

“During one of the toughest times in living memory across the public sector, HM Revenue and Customs, Treasury and Insolvency Service staff have all privately told insolvencynews.com this week that the only option is to plough on regardless. The Insolvency Service's steep challenges were recently laid bare in a blunt address from a union boss, at a time when the organisation is seeing significant influence over its own affairs shift to the Treasury, as well as the Department for Business, Innovation and Skills”.

These comments mirror our own experience at the present time. Rightly so HMRC are getting tougher with non-payers of tax, and whilst it is also more difficult to make 12 months + arrangement on the Time to Pay scheme, it also seems there is a reluctance by the Tax Offices to seek recovery actions through the courts for legacy debt particularly where the business in question is now paying current taxes on time.

Beer & Young Commended at Business Moneyfacts Awards

2011-03-29T18:23:00.002+01:00

We are delighted to announce that Beer & Young has picked up the ‘Commended’ Award for ‘Best Corporate Finance Boutique’ at the Business Moneyfacts Awards ceremony held on 24th March at the London Marriott Hotel, Grosvenor Square.

The Business Moneyfacts event celebrated its 10th year and was attended by some 400 industry professionals.

Lee Tillcock, Editor of Business Moneyfacts said “the ceremony has recognised those providers, brokers and trade bodies that helped to make 2010 a more positive year for businesses”

Government disagrees with itself on the impact of Business Link's closure, says enterprise group

2011-03-16T13:48:00.002Z

Government research into the potential impact of the closure of Business Link suggests ministers will not meet their own objectives for effective business support, an enterprise group has suggested.

The national enterprise network, which represents local enterprise agencies, made the claim ahead of the winding down of local elements of government-backed Business Link services which will be replaced by the main national Business Link website and a call centre.

The group pointed to research commissioned by the Department for Business, Innovation and Skills in November 2010 which concluded: "A reduction in the availability of Business Link’s face to face service could result in a lower take-up of external advice, and confusion remains about which sources of advice to trust.

"Start-ups and new businesses will be particularly affected as they are the least likely to know what support they need, the least able to find or trust appropriate support and the least able and willing to pay for this support."

The study also found that for many entrepreneurs, the Business Link website complements, rather than substitutes for, telephone and face-to-face support, is not a key route to face to face support and is "barely looked at" by many company owners before getting in touch for advice.

All this, NFEA said, conflicts with the government's heavy focus on online support in the new system of business support. "Online business information is undoubtedly valuable but it appears that this is rarely regarded as a useful form of business support, other than in answering factual queries," the organisation added, "Nor is it seen as an adequate replacement for face to face advice.

"We appreciate that major changes to the website are planned, but this is a massive task and whilst it may improve the usability and relevance of the content, it will not remove its perception as a government-owned service, the use of which will benefit the government rather more than the business user."

NFEA also criticised the government's suggestion that "the best advice for business comes from other experienced business people". The group disputed this saying that while experience is important, qualified and professional business advisers offer the best guidance.

"The best musicians do not make the best music teachers, and vice versa," it added. "The best footballers do not make the best football coaches, and vice versa. And we would suggest that successful business people do not always make the best business advisers, nor will they necessarily make the best business mentors."

Concluding its list of concerns, the NFEA said it was worried that the abolition of the local Business Link service "will have a damaging effect on the rate of new businesses coming through, the quality of their management, the rate of their growth and ultimately their sustainability".

Article sourced from businesszone.co.uk

Corporate failures fall more than 10 per cent

2011-03-10T14:04:00.000Z

The number of UK firms going bust dropped in January by more than 10 per cent when compared to the same month last year, according to Experian’s latest Insolvency Index.

The credit reference agency’s figures revealed that 1,266 businesses failed in January 2011, down from 1,426 during the same month in 2010.

Further findings from the research showed that businesses in the south west were among the most robust, with insolvencies in this region falling 11 per cent.

Wales and the north west were the only two regions to see an increase in the rate of business insolvencies when compared to the previous year, with a 33 percent rise in the north west and 56 per cent in Wales.

Max Firth, managing director of Experian pH, said: “Our analysis shows that business failure rates are falling steadily and the financial strength of the UK’s business community is improving.

“Our data also shows that the post-recession business population is beginning to increase once again, with the net number of firms trading up by one per cent when compared with last January.”

Nicholas Young, Managing Director at Beer & Young comments: “These figures are of course welcomed, particularly in light of the poor trading for the previous quarter for “UK plc”. However, whilst business failures are down, so many businesses are struggling with their finances. Balance sheets are weak and banks are themselves finding it difficult to lend to SME’s. Equity funding can be the answer. Private investors have capital available and bring added value skills with their money. They can be the difference between growth, profits and business growth, over struggle, firefighting and stress for business owners.”

Turnaround Funding Project

2011-02-24T14:15:00.000Z

We are delighted to announce a successful completion of a turnaround funding project that encapsulates all the reasons why we operate in this market… >>>

New Year Case Study

2011-02-02T21:03:00.003Z

The run up to Christmas is always very busy with many clients seeking to close out on funding before the break - inevitably almost all have to wait until January and even February before completion takes place. We have five such projects ranging from £75,000 to £2.5 million of investment, demonstrating the power of our investor network.

We can report that investor appetite for quality turnaround projects has never been higher. We are typically introducing clients to three, four and five different investors in short order, this gives our client maximum opportunity to obtain real offers of funding. Investors have private equity readily available and can add value to the business with their experience, contact base and ability to drive growth and profit. Below is a recent example of a project where we have been instrumental in saving the business, helping the directors raise capital in a matter of weeks.

Wholesale distributor, south east - case study:
Our client is a privately owned wholesaling distributor selling a variety of branded products to retail. despite a history of profitable trading (peaking to date at £14 million turnover with £1.5 million pre-tax profits) they were in danger of going under largely due to a single unforeseeable event. this loss of business together with the general effects of the recession and banking crisis left them with no capital with which to trade.

They were nevertheless a very sound business with much potential. We organised two meetings for them in quick order - one with a private equity group and the other with an entrepreneur. Both parties indicated they wanted to fund and buy into the company. (We had three more investors lined up should they have been needed.)

We are delighted that these investor offers gave the directors, our client, 'ammunition' and options when they confronted the other shareholders. Below is an unsolicited comment from the Finance Director.

"The funding will see us through our immediate difficulties and will allow us to exploit the opportunities we discussed as part of our review of expected activity in 2011, however, and not wishing to tempt providence, if things do not work out as planned I would hope that you would be willing to assist us again in future if necessary, as both the Managing Director and I were truly impressed with the manner and speed with which you were able to identify and put us together with suitable new investors, and the options this gave us were very much instrumental in focusing our shareholders and prompting them to reinvest, although I realise that this is perhaps not the best financial outcome for Beer & Young"

We Can Help So Give Us a Call…

Beer & Young specialise in raising capital urgently for businesses who are suffering cash pressures. Increasingly our clients find themselves under pressure from their key stakeholders, and even those generating profits are unable to unlock new working capital facilities from their banks. Investment from private investors can be the answer; it enables the business to secure its immediate future and gives it the funds necessary to plan for growth and profits.

If you know of a business that is experiencing financial pressures and has a need for capital, please talk to us. Our Investors are very active in today's market; businesses can be preserved and subsequently thrive - for the benefit of all stakeholders.

Nick Young – 0207 329 6886

Companies in critical condition owe £53bn

2011-01-25T15:56:00.003Z

UK businesses with critical problems owe more than £52.7bn to creditors, suppliers and service providers, according to Begbies Traynor’s latest Red Flag Alert.

The study also shows that by the fourth quarter of 2010, 147,836 companies were experiencing ‘significant’ or ‘critical’ financial problems, a 20 per cent rise from 123,361 firms in the third quarter of last year.

The report also claims a 24 per cent increase in the number of companies in distress from the third quarter of last year, with more than 61,000 struggling companies exposed to public sector spending cuts by the end of 2010.

The alert also shows a 17 per cent rise to more than 10,000 struggling businesses in the retail sector, from the third to fourth quarter of 2010; while the wholesale sector experienced the largest rise in distress of 30 per cent.

Begbies’ Red Flag Alert measures corporate distress through a complex methodology, drawing on factual legal and financial data for companies trading for more than a year.

It monitors the number of struggling firms in two categories: significant problems and critical problems.

Companies with significant problems are those with either a court action and/or poor, insolvent or out of date accounts. Firms with critical problems are those with county court judgements totalling £5,000 or more and/or wind-up petition related actions.

The 3,018 companies experiencing critical financial problems alone owe £52.7bn to creditors, suppliers and service providers, which compares to £57.5bn owed by 2,943 companies in the third quarter of 2010.

Ric Traynor, executive chairman of Begbies Traynor Group, said: “Today’s figures show that UK businesses are demonstrating real signs of distress and that trade creditors are both losing patience with their debtors and in need of collecting cash into their own businesses.

“Coming against a backdrop of the largest decline in house prices for a year, higher inflation, an accelerated decline in business confidence, and higher unemployment forecasted for 2011, these figures indicate the renewed challenges facing businesses across most industries in 2011.”

The Red Flag Alert shows that the sectors most exposed to public sector cuts, which comprise construction, IT, recruitment, advertising and business services, have seen a 24 per cent increase in financial distress to 61,534 in the fourth quarter of 2010.

Traynor said: “These figures demonstrate that the sectors most reliant on government spending are already feeling the impact of public sector cuts, confirming the financial effects of the recent contraction in the services and construction sectors.”

He added: “With the full implementation of budget cuts only starting to show through in these figures, public sector exposed sectors are likely to face significant increases in the level of corporate failures over the course of 2011.”

The retail sector saw a 17 per cent rise to 10,250 companies facing financial distress from 8,751 in the third quarter.

Traynor added: “The retail sector is seeing an increase in distress ahead of greater pressure on consumers’ disposable incomes from higher inflation, tax rises and job cuts.

“With recent evidence of falling house prices, we expect a combination of deteriorating consumer confidence and financial resources to result in an increase in business failures in the sectors most exposed to discretionary spending as we move through 2011.”

VAT rise will tighten screw on SMEs

2011-01-25T15:56:00.000Z

Almost a third of small firms (30 per cent) will need extra funding to cope with the increase in VAT, according to research by British bank.

Some 35 per cent of small and medium-sized enterprises (SMEs) surveyed by the bank said that the VAT rise will strain their cashflow in 2011.

The bank said businesses usually have to pay VAT to HM Revenue & Customs before they have received payment from customers, meaning that the VAT rise will bite into their working capital, increasing the need for funding.

A spokesperson for the bank said: “The VAT rise will only add to the financial squeeze faced by many SMEs.

“A worryingly high percentage of SMEs say they will require additional funding but, with many of the big banks still reluctant to extend credit, the VAT rise could strain working capital to breaking point.”

The bank, which surveyed 292 SMEs for its study, stated that many firms are already being forced to wait months for bigger clients to pay invoices. The bank believes there is a risk that big businesses that buy services from small firms may try to mitigate the impact of the VAT rise by delaying the payment of invoices even longer. The VAT rise, therefore, may hit SMEs hardest.

Businesses will need to start paying their VAT bills at the new higher rate to HMRC at the end of February.

The spokesperson added: “Late payment of invoices is already a serious concern for many SMEs and the prime cause of their cashflow problems. The temptation for clients of SMEs to sit on invoices longer to shore up their own cashflow in response to the VAT rise will be difficult to resist.

“The public sector has made enormous efforts to keep payment days to its suppliers to an absolute minimum. Big businesses could do a lot more to alleviate pressure on their smaller suppliers by reducing the amount of time it takes to pay invoices.”

The bank says that the VAT rise comes at a time when many high street banks still have in place credit crunch era restrictions on lending – such as restrictions on unused overdraft facilities.

HMRC is also reported to have become more reluctant to allow businesses to roll over agreements to defer tax under its Time to Pay scheme.

The bank added: “The Time to Pay scheme has been a vital lifeline for struggling SMEs over the last two years but statistics suggest that HMRC has been refusing a slightly higher proportion of requests from businesses to defer tax payments.

“HMRC should consider whether its eligibility criteria for Time to Pay should temporarily be loosened in light of the VAT rise.”

Insolvency News this week… Business failures down 12 per cent

2011-01-21T12:04:00.000Z

The level of UK business insolvencies fell more than 12 per cent for the whole of 2010 compared to 2009, as firms managed to survive the economic climate.

A report from business information provider and credit reference agency Equifax shows that corporate insolvencies decreased from 26,000 in 2009 to 23,000 in 2010.

The study also states that the level of corporate failures dropped 8.4 per cent year on year for the fourth quarter of 2010.

While the report paints a more positive picture for UK plc in 2011, it also reveals a 6.4 per cent rise in business failures during the last three months of 2010 compared to the third quarter.

Neil Munroe, external affairs director at Equifax, said: “What we have seen throughout 2010 is a steady drop in the number of organisations failing. Pay freezes and tight control on invoice payments were reported consistently throughout the year.”

He added: “It appears that there has been a clear focus on cost control and cash flow management which has aided survival.”

Equifax’s Business Failures Report also shows the regions that are recovering and those still struggling in the aftermath of the recession.

Scotland, for example, saw the highest increase in failures from the third to the fourth quarter of 2010 – at 32.9 per cent.

The level of business failures in London increased from 16 per cent, from 1,326 in the third quarter to 1,538 in the fourth, while the west Midlands also suffered, with insolvencies rising from 654 to 787 in the final three months of the year.

Equifax’s report attributes these rises to a number of companies being wound up at the end of their business year.

The regions that bucked the trend of quarterly rises were the east Midlands, with a 23.4 per cent drop quarter on quarter; the north west with a 7.6 per cent fall and the south west with a 2.1 per cent decrease.

Best Corporate Finance Boutique Award

2011-01-19T13:32:00.000Z

2011 is off to a flying start with Beer & Young named as a finalist for the Business Moneyfacts, Best Corporate Finance Boutique award.

The Business Moneyfacts awards ceremony will be held at the London Marriott Hotel in Grosvenor Square on Thursday 24^th March 2011.

Acquisition International

2011-01-12T16:23:00.000Z

B&Y continue to enhance their reputation in the UK, regularly being asked for their expert views on the market place, most recently by Acquisition International who invited B&Y to discuss conditions in the UK, commenting “Beer & Young is extremely well regarded in the insolvency and restructuring industry”

R3’s quarterly ‘Business Distress Index’ reveals almost 50% of UK businesses are experiencing falling profits

2010-12-01T12:02:00.000Z

R3, the association for insolvency, business recovery and turnaround professionals has released their quarterly ‘Business Distress Index’ revealing 850,000 businesses are currently experiencing falling profits.

Decreased profits’ was identified as the most common cause of distress, experienced this quarter by nearly 50% of UK businesses. 44% of businesses (or 750,000) have seen a reduction in their sales volumes, whilst 32% have seen a recent fall in market share.

R3 President Steven Law commented:
“These signs of distress on their own do not suggest insolvency is inevitable but they should be observed over the longer term. It is worrying that the most common signs recorded in September this year are decreased profits and a reduction in sales volume, given we are now out of recession. Although corporate insolvency numbers have decreased over 2010, experience of past recessions tell us to expect them to continue rising as the recession finishes in an ‘insolvency lag’.

He said: “The UK’s insolvency practitioners are expecting corporate insolvency numbers to increase for 2011 to 27,500 (In 2009 the figure was 26,400).”

Owls given 28 days to fend off administration

2010-11-22T16:14:00.001Z

Sheffield Wednesday have been given a 28-day stay of execution by a High Court Judge in order to find new owners and pay off their outstanding tax bill.

The club, best known as ‘The Owls’ had been facing a winding up petition from HM Revenue & Customs for £600,000, but the judge revealed in court that the figure had more than doubled to £1.4m due to interest, VAT and fines.

The judge confirmed that the Yorkshire football club, were currently insolvent, but had been granted the extension under exceptional circumstances.

Deputy prime minister and Sheffield MP Nick Clegg, who lobbied the tax authorities and the club’s bank to help win a reprieve, warned that Wednesday’s escape was “only a stay of execution and much more needs to be done.”

Wednesday had hoped to broker a deal before the court date with one of four suitors including Leicester chairman Milan Mandaric, but time ran out. The Co-Op Bank, the largest creditor with around £23m outstanding, was said to support the Mandaric offer, but current club chairman Howard Wilkinson has been critical of the offer.

Insolvency News reports on HM Revenue and Customs 'Time to Pay'

2010-11-04T08:29:00.008Z

“HM Revenue and Customs has finally revealed just how many Time to Pay arrangements have been granted to struggling businesses since the start of the recession. The official figures show that a whopping 371,200 agreements, worth £6.8bn, have been agreed. Critics of the scheme have said that whilst it has prevented an Armageddon, it is simply delaying the inevitable wave of collapses that will occur once the measure is withdrawn – the very definition of the “extend and pretend” catchphrase.”
For further reading - click here...

Insolvency & Rescue Awards 2010

2010-11-04T08:22:00.001Z

For the team at Beer & Young, the Insolvency & Rescue Awards on 21^st October proved to be an evening of delight and jubilation with Beer & Young taking away the award for Business Rescue Funder of the Year (Broker/Equity).

The event, held at the Lancaster London saw almost 600 professionals from across the insolvency and rescue sectors enjoy a night of entertainment and festivities as industry winners took home awards.

Managing Director Nick Young commented:

“We are very grateful to come out on top of our peer group in this key category. We are delighted to have been recognised as the major deliverer of equity funding to SMEs seeking working capital for their businesses.”

Beer & Young September Update

2010-10-04T13:20:00.002+01:00

It has been a busy September at the Beer & Young offices. As usual we've seen an upswing in investment activity following the summer holiday season - investors are active and a number of projects are reaching a positive conclusion.

Tomorrow sees Nick Young spending his day locked in a committee room as one of the judges for the Insolvency & Rescue Awards 2010. Beer & Young has been nominated for two awards - sadly Nick has been barred from voting in these two categories, impartiality rules! The judging panel is made up of recognised industry figures who can bring their skills, experience, and knowledge of the turnaround market to bear on proceedings. Sworn to secrecy, the results will be anounced at the gala dinner on 21st October.

Manchester & North Cheshire Voice of Business

2010-10-04T13:11:00.011+01:00

Manchester & North Cheshire Voice of Business had an article about the turnaround industry, which is shown here (Click for a better view):

It has Ian Ross of Beer & Young giving valuable advice to SME's (Small to Medium Enterprises)

Two Nominations for Beer and Young

2010-09-14T14:51:00.001+01:00

We are delighted to announce Beer & Young has been short-listed for two awards at this year’s Insolvency and Rescue Awards.

Launched in 2008, The Insolvency and Rescue Awards is the biggest event in the insolvency and turnaround industry, where professional excellence and outstanding achievements are recognised.

Beer & Young is a finalist in the Business Rescue Funder of the Year – Broker / Equity category and Senior Associate, Michael Morley-Smith has been nominated for the ‘Turnaround Practitioner of the Year’ award.

Nick Young, Managing Director of Beer & Young will join the judging panel for these awards to be held on 21 October, though sadly he will not be judging the above categories!

For more information about the Insolvency and Rescue Awards visit Credit Today or the Insolvency and Rescue Awards website.

A WINNING COMBINATION SME BANKING RELATIONSHIP MANAGERS + BEER & YOUNG THE CATALYST FOR BUSINESS RECOVERY

2010-09-05T19:50:00.000+01:00

We all need a little extra help sometimes, but where do SME’s turn when the going
gets tough and additional capital is needed to re-build their depleted balance sheet?
This is where Beer & Young can be the answer.

Since 1998 Beer & Young has been acting for undercapitalised SME’s who have
often reached a critical point in their banking relationship. Beer & Young is focused
on investor backed recovery solutions – the typical Beer & Young investor will be
an experienced ‘Business Angel’ willing to invest in a turnaround situation or simply
where urgent funding is required.

Beer & Young is delighted to have forged close working relationships with many
relationship managers across the banking community. Some, but not all, operate
within the business support/special situations departments of the bank. The common
characteristics of the accounts that are being managed tend to be:

Profitability has deteriorated and/or losses are accumulating
Liquidity is poor and the bank facilities are increasingly ‘hardcore’
Gearing has reached a tipping point where the bank is no longer comfortable

• Profitability has deteriorated and/or losses are accumulating
• Liquidity is poor and the bank facilities are increasingly ‘hardcore’
• Gearing has reached a tipping point where the bank is no longer comfortable

The above could be described as the ‘hard issues’, but financial ‘fire fighting’ takes
an inordinate toll on business owners in terms of emotional energy and commitment.
The old adage of ‘trying to see the wood for the trees’ is often very pertinent. This is
an area where the hands on help and experience of a Business Angel investor can
be invaluable.

We all know about the problems that the global credit crunch has caused, but this
has not affected the investor appetite for SME opportunities. Business Angels will
make their own decisions as to how and when they invest – they see investing in
businesses that have been successful in the past as far less risky than early stage/
start-up situations.

This is a counter cyclical market, where there is increased liquidity for turnaround/
distressed opportunities. The upside for bank relationship managers is that there
is access to ‘Business Angel’ funding for SME’s via specialist firms such as Beer &
Young.

We are always pleased to talk to bankers to explain our services more fully and listen
to the views of front line lending managers. Please contact our London offices on
0207 329 6886 or 07808 788803 to arrange a convenient appointment – please ask
for Declan Williams (williams@beerandyoung.com).

2010-07-20T15:36:00.001+01:00

Business Recovery Service Success in the West Midlands

2010-07-08T17:15:00.000+01:00

Connect Fast Track for Innovation and Investment is an initiative to help stressed businesses that has seen good success. Beer and Young's part in this is detailed in this newsletter (click the title)

OFT Slams Insolvency Service

2010-06-30T17:32:00.002+01:00

The insolvency profession and particular the role of insolvency practitioners (IPs) has come in for some serious criticism from the Office of Fair Trading (OFT), after a 7 month study of the market. Clive Maxwell, the OFT Senior Director of Services, said: “Self-regulation has not worked. We have called for some fundamental changes so that bad behaviour can be better constrained by fear of regulatory punishment and fines. Our recommendations would benefit the wider economy and good insolvency practitioners, without imposing on the taxpayer.”

One of the major issues highlighted in the OFT report was the level of IPs fees in comparison to the level of realisations and therefore dividends to unsecured creditors. This has always been an area where unsecured creditors see themselves being left behind while the IPs fees take preference.

In reality probably a few bad apples in the insolvency community have meant the whole profession being tainted with the expensive undertaker badge and the vast majority of IPs would welcome a more robust regulatory framework.

Specialist firms like Beer & Young have worked closely with IPs for many years and their experience has generally been very positive, particularly where an insolvency process was required as part of an investor backed turnaround solution. Inevitably the baggage of the past is sometimes prohibitive for an investor to simply ‘pick up the tab’ and a re-structuring process needs to be utilised.

The real key is working with all the stakeholders, including unsecured creditors, to make sure the business has the maximum chance of success in the future. It is crucial for SMEs to engage with firms like Beer & Young no matter how distressed things might seem and they will focus on the positives. An insolvency process may be necessary but this can merely be a stepping stone to a positive future, particularly with new investment being provided as part of the recovery solution.

Insolvency & Rescue Awards 21 October 2010

2010-06-17T16:22:00.002+01:00

Nick Young, Managing Director of Beer & Young, has been chosen as one of the panel of expert judges for these prestigious industry awards.

These awards recognise major contributions and professionalism in the turnaround market place with categories including Banking Restructuring Team of the Year, Corporate Recovery Firm of the Year , Business Rescue Funder of the Year (Broker/Equity). The focus of the event is very much to celebrate excellence in the sector and the positive contribution that business recovery professionals make in these challenging times.

Nick is delighted to have been nominated as a judge and comments:

“I am very pleased to join a panel of industry experts and hope to make a very positive contribution in the judging process.

These awards are a great way to recognise the hard work and skills of the people in our market.”

This years event is being held at the Lancaster London hotel and promises to be the biggest yet with an estimated 600 guests.

PLAN AHEAD

2010-06-07T16:42:00.001+01:00

All businesses, particularly SMEs, keep an eye on cash.
Most will know to the nearest £ what their bank balance is at close of business last night.
A few might even have the link to on-line banking on their computer or mobile device on continuously.

Fewer, however, look ahead to see if there will be enough cash to pay future salaries and other bills.

How often have you thought that “There’s too much month left at the end of the money”?

This is where a forecast can come in handy, says Ian Ross, a Chartered Management Accountant and Associate in the North West for Beer & Young Ltd.

The ideal forecast will have visibility for at least 13 weeks, and will be split into weeks.

Why 13 weeks?

This period has been chosen so that it covers at least one VAT payment date. The payment of VAT, whilst predictable exactly in terms of the date and approximately in terms of the value, is usually the payment that catches a business unawares.

Forecasting the timing of receipts from customers is more tricky. If you have good records and a close business relationship with your key customers, you can usually predict to within a day or two when they will pay, and how reliable a promise to pay really is. By predicting the amount to be paid for the main customers individually, this will leave a smaller value of “others” to predict.

Forecasting the payments made through standing orders and direct debits is usually reasonably easy. Predicting wages and salaries and the related PAYE and NI is generally not too problematic. Any remaining cash available will go to the suppliers , where the critical suppliers will be paid first.

With luck, there will be some money left over for the owner.

Even in the best-organised businesses, this forecasting and control of cash can sometimes lead to a situation where outgoings exceed income.

If this can be predicted in terms of time and amount, the bank or main lender is usually the first port of call. Armed with your cash flow forecast, this will provide a good basis for a sensible discussion.

If the bank is unwilling to lend more, then what other options are available?

Asset-based lending or ABL, using property or debtors as security is a popular way to fund a growing business. Make sure you understand all the rules associated with credit checking customers, concentration of debt (that is, having a high proportion of debt in the hands of a small number of customers) and recourse (that is, what happens if the invoice is more than 90 days overdue).

Sometimes ABL is not an option and more radical options are needed.
One such is to consider selling a minority stake in your business and bringing in an extra business partner who contributes not only cash but expertise. This route can provide a lifeline for good businesses that may be struggling temporarily and needs additional senior resource. It can be a lonely place running a business and ultimately it is better to have 70% of something with a substantial future than 100% of something with limited prospects.

An incoming investor will usually bring significant added value to a business and open doors that the existing management could only dream about. This creates a real ‘win-win’ where the aspirations of all the parties can be achieved.

Whatever you do, take the appropriate specialist advice from professionals you trust and remember the old saying...Plan ahead. It wasn’t raining when Noah started building the ark.

To contact Ian or find out more about equity investors, e-mail ian.ross@beerandyoung.com or his colleague shon.laird@beerandyoung.com

HMRC GETTING TOUGHER

2010-05-28T20:13:00.002+01:00

This is something we highlighted in our last newsletter in February and the ‘sting in the tail’ seems to have arrived with HMRC starting to take a tougher stance on arrears.

However, we would stress, that HMRC are still very receptive to the proposals that we put to them. They certainly see our involvement as a very positive step and please bear us in mind for any situations where we can leverage our relationships.

STRATEGIC ALLIANCE WITH MARKET LEADING INDEPENDENT BROKERAGE HILTON BAIRD

2010-05-28T20:12:00.005+01:00

We are very pleased to announce that we have established a new strategic alliance with Hilton Baird (www.hiltonbaird.co.uk), which will provide our clients with a wider range of financial solutions. Hilton-Baird is the largest independent broker in the UK and has a unique approach to arranging financial options for a range of businesses, from start-ups to corporate entities.

There are very good synergies between us and this creates opportunities for significant reciprocity. For us this will be particularly relevant when a business simply cannot access new/alternative finance and equity investment is the most appropriate solution for the situation.

This is tangible evidence of two market leading businesses aligning their respective capabilities for the benefit of SME clients. Please contact us if you recognise benefits to your clients via similar strategic partnerships/alliances.

£750,000 EQUITY INVESTMENT COMPLETION

2010-05-28T20:12:00.002+01:00

This is another great example of the current vibrancy of our market.

Our client was referred to us following an Independent Business Review (IBR) by Moorfields Corporate Recovery that was undertaken upon the instructions of the company’s bankers. The business had been struggling as their market place had been badly affected by a number of recessionary factors and critically the bank had no further appetite to increase their exposure.

However, there were a number of very positive factors that enabled us to generate significant investor interest, with 5 meetings being held within the first two weeks following engagement.
Within 3 weeks our client was in advanced discussion with one of our investors and we are delighted to report that completion took place a short time thereafter.
This was an excellent result all round with all the stakeholders benefitting significantly and formal re-structuring procedures were avoided.

Nicholas Young, Managing Director

GREAT START TO 2010 - Second Newsletter of 2010.

2010-05-28T20:11:00.002+01:00

In the first quarter of this year we were delighted to have successfully helped over 30 clients in the West Midlands region as part of the ‘Business Recovery Service’ initiative. Some of you may recall this was a very positive scheme to provide “at risk” businesses with consultancy/advisory services. This support package was offered at NO COST to the recipient SME as it was fully paid for from funds provided by the European Regional Development Fund and Advantage West Midlands.

This has also helped us to leverage the skills of our team and we are looking to develop our consultancy offering further in this area, particularly if similar schemes are rolled out across the country – although RDA budgets have already taken a pounding this week!

Luke Johnson and Beer & Partners

2010-05-24T08:33:00.002+01:00

A number of financial news stories have noted the acquisition of a 27% share in Beer & Partners by Luke Johnson, the serial entrepreneur who was famed for bringing Pizza Express to the market. They are for example:

Agreement to be support advisors to Beer & Young Ltd

2010-04-27T18:32:00.000+01:00

In March 2010 Going For Grants signed a Business Development Agreement with Beer & Young Ltd, London.

Beer & Young has been established since 1998 and offers a range of services to Small and Medium sized Enterprises (SMEs) that are typically facing pressing financial issues. They act for clients that often require help on an urgent basis and always aim to deliver solutions rapidly to meet their needs. Their services include the following:

Turnaround/Urgent Investment
Company Re-Structuring (e.g. Company Voluntary Arrangements)
Accelerated Business Sales
HMRC Negotiation
Turnaround Consultancy

The above services are delivered by their very experienced team of business professionals who fully understand the pressures facing business owners/managers.

Their principal office is in the centre of London, however, they have representation in all the major regions of the UK and a very extensive network of contacts within the SME community – including government agencies (e.g. HMRC and Business Links), all major banks, asset based lenders, legal practices, accountancy firms, and many other professional services providers, which now includes Going for Grants.

Contact Details for Beer & Young:
Website: http://www.beerandyoung.com
Address: Painters Hall, 9 Little Trinity Lane, London EC4V 2AD
Contact: Nicholas Young, Managing Director; nick.young@beerandyoung.com
Phone: 020 7329 6886

How Struggling Companies Get an Injection of Business Finance

2010-04-16T11:02:00.002+01:00

In the recession of 2009/2010 many companies are going through cash flow problems brought on by poor sales, few new sales leads and financial obligations such as employee payroll constantly looming. Business finance is needed, but seems impossible to obtain. In a downward spiral, the company may easily start to lose their own sense of confidence, lose morale, and lose the confidence of their suppliers. This can be a lethal mix. If suppliers even start to believe in a companies inability to pay the bill, they’ll understandably require it up-front which makes the cash flow much more difficult. Then what about the banks and the company overdraft facility?

Companies such as Financial Rescue in London are key players in the Turnaround Finance industry that generally finds success by injecting business finance into the company through an industry expert who has ready funds he or she would like to invest. They need to believe that the company has a fundamentally sound business model and that the problems can be rectified. If they can, the wealthy expert will provide the business funding and generally take a position on the company board as a director (not necessarily, or usually, a majority director) and advise as to changes that are required. The changes can be painful – but since it’s now a third party that is making the changes they are often more palatable because of the acceptance of the position the company was in and the new capital provided.

Admittedly, business can be tough, and changes in a struggling company can be tough. But now the company has another shareholder and one with experience in the industry segment with a mandate to make changes. The company that was struggling is now in better shape and is returned to financial health. What may have looked bleak now looks bright and the company can continue to trade in a competitive environment, even a recessionary one.

Business Angels Adding Value in Turnaround

2010-04-16T09:39:00.000+01:00

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.

Contact declan.williams@beerandyoung.com to find out more about how Beer & Young help struggling businesses or if you are interested in turnaround investment.

Commercial Interior Design and Consultancy - Case Study

2010-03-29T12:18:00.000+01:00

Location: Re-located to the UK from Portugal
New Capital: Equity (Amount Not Disclosed)

Beer and Young's client company was based in Portugal and provided interior design and consultancy services to the local commercial market. However, a number of its customers had suffered in the economic downturn and they were consequently unable to pay their bills to our client. This resulted in their business being exposed to severe cash flow pressures and with little prospect of being able to continue to trade.

This was a challenging situation, however, one which we were delighted to take on. Our client wanted to return to the UK as they recognised the market here still presented opportunities for his business.

Within a few weeks of engagement the client was offered acceptable terms by one of our investors, who owns a complimentary industry sector business and a good strategic fit was the key driver to a successful completion. A new UK corporate entity was formed as the most appropriate investment vehicle and a full financial package has been provided to fund budgeted working capital requirements.

HEALTH & FITNESS BUSINESS GETS BACK IN SHAPE, 18 MONTHS LATER AND STILL GOING STRONG

2010-03-04T16:15:00.002Z

Successful Company Voluntary Arrangements (CVA’s) – Yes they do exist – please read on!

In May 2008 we were approached by the owner/operator of 2 health and fitness clubs. He was faced with an extremely challenging situation as one of the clubs was loss making and this had completely eroded the capital base of the company – a balance sheet ‘black hole’ had opened up and it was growing rapidly.

However, there were some significant positives:

Directors had formulated a new ‘budget’ club model that looked viable.
The underperforming club could be ‘wound down’ with the support of the landlord.
Local development/re-generation was starting to show signs of tangible benefits to the better performing club.

The most precious commodities in these situations are often some time to review the options and a strategy to relieve cash flow pressure. We worked closely with the owner and other stakeholders to ensure that any immediate threats to the business were dealt with and this facilitated the time to formulate a workable CVA proposal.

The following testimonial is from the owner.

“I was faced with an almost impossible financial situation when I was introduced to Beer & Young. However, with their help and guidance we put a business recovery plan (CVA) in place that has put my club back on a firm financial base.

This gave us the opportunity and time to re-position the business and I am delighted to say we are now profitable once again.”

DR – Independent Health Club Owner/Manager – Feb 2010

Beer and Young: BUILDING our PRESENCE across the country

2010-02-23T15:00:00.001Z

We, at Beer and Young, are delighted to have established a greater presence across the country with new associates in the following locations:

Liverpool Area: Shon Laird (Mobile: 07836 272649 em: shon.laird@beerandyoung.com)

Manchester Area: Ian Ross (Mobile: 07905 624456 em: ian.ross@beerandyoung.com)

West Midlands: Chris Jones (Mobile: 07879 056456 em: chris.jones@beerandyoung.com)

West Midlands: Brian O’Reilly (Mobile:07765 247249 em: brian.oreilly@beerandyoung.com)

Bucks: Andrew Hall (Mobile: 07908 733203 em: andrew.hall@beerandyoung.com)

Herts/Beds: Robin Pyke (Mobile: 07734 272113 em: robin.pyke@beerandyoung.com)

Please feel free to make contact with any of the above members of our team. Shon, Ian, Chris, Brian, Andrew, and Robin, are all keen to build local contacts on the ground in their respective areas.

We now have a team of 15 associates across the country and combined business experience that totals well over 200 years. We continue to increase our expertise in almost every sector of the economy.

OUR FRIENDS AT HMRC

2010-02-23T14:58:00.000Z

Although this might appear a little bit of a contradiction in terms for many of us, we are genuinely pleased to say that we have forged some very positive relationships with HMRC over the last 12 months.

The Debt Management Units have been very receptive to the ‘Time to Pay’ or CVA proposals we present to them on behalf of our clients.

The ‘sting in the tail’, however, looks as though it has arrived as HMRC are starting to take a tougher stance on arrears.

I would stress, however, that we are still in a good position to leverage our relationships with HMRC and would always encourage any business with arrears issues to contact us.

Nicholas Young, Managing Director

The Glass Really is Half Full

2010-02-23T14:55:00.000Z

Welcome to our First Newsletter of 2010.

‘The glass really is half full’ rather than ‘half empty’ has been very much part of our philosophy during the recession and since Beer & Young started in 1998. No matter how dire things might seem there will always be some positives. We really don’t like seeing failure and business owners throwing in the towel when they have not fully reviewed all the options. Our clients need help, support, and positivity, as well as the money! This brings me nicely onto…

SOME VERY GOOD NEWS – THE BUSINESS RECOVERY SERVICE (BRS)

We are delighted to have been awarded a contract, via Business Link West Midlands, to provide “at risk” businesses with consultancy/advisory services. This support package has been offered at NO COST to the recipient SME as it is being fully paid for from funds provided by the European Regional Development Fund and Advantage West Midlands.

We are very pleased to have been recognized as a leading firm in our market place and we are actively delivering this service to a number of BRS clients in the West Midlands.

BPIF conference aims to map out routes to finance

2010-01-20T15:29:00.000Z

Offering company equity to private investors for finance could be the best route for printer companies looking to grow in the period after the recession, according to Nick Young - one of the speakers for the February 2010 BPIF Finance Conference. Young, founder of business finance/turnaround finance company Beer and Young, will speak on the subject 'Accessing alternative funding and making it work for you' at this conference. He claims that conventional bank and asset-based routes to business finance were still tough to access...

Is Private Equity Your Solution?

2009-08-30T01:28:00.001+01:00

It could be. Of course there's no such thing as as a free private equity injection, but in general the blessings outweigh the curses. In the well known TV program Dragon's Den - part of the benefit of getting the funding is that the needful inventor also gets the skills of the investor. Would Regae Regae sauce really have made it so big if it were not backed by the expertise of Peter Jones and Richard Farleigh? The actual private equity is probably regarded as a small part of the success factor. If an investor thinks your company is worth investment in - it's a good signal that he or she has seen something in the company and perhaps it's management that is good and worth supporting.

Postive Solutions for a Business Suffering During the Recession

2009-08-15T12:38:00.000+01:00

We like to be able to offer a good news story and Beer & Young, the UK’s leading provider of equity funding for small businesess, have year on year been able to help businesses experiencing difficulties. We have highlighted one such case below. It involves an historically successful 30 year old business, an entrepreneur who was planning for retirement but was caught short by the recession and all too quickly found his business in serious trouble.

Beer & Young’s solutions have stabilised the business, kept the confidence of the key stakeholders, particularly the bank, and should allow for an orderly and profitable exit for the entrepreneur in the next 2-3 years.

BESPOKE GLASS LTD

The business in question is a designer and manufacturer of bespoke glass rooms & furniture, catering for discerning customers. Turnover has returned to nearly £9 million this year, having suffered a major drop off of new business during the second half of 2008.

When Beer & Young were introduced, the creditor position had been untenable and was sitting at £4 million including £1million to the bank and £1million of clients’ payments on account.

Suggestions of pre-packs abound - we recommended that the business be preserved with a CVA together with investment.

The CVA has been passed with full support of creditors, offering 40p in the pound. Total write off unsecured debt £700,000.

A new investor was introduced who has agreed heads of terms that will allow the company’s principal to withdraw his Bank guarantee, have his loans repaid, and retain a decent slug of equity in the company. The investor will provide the necessary working capital, take ownership of the freehold property together with its bank debt and have a controlling stake in the company.

The business itself benefits from continuity, customers have not lost out and 95 staff have retained their jobs. Goodwill and value have been preserved and should trading continue to be positive, there is no reason why the company will not return to its historical position of generating significant profits year on year.

If you know of a business that is suffering and has a need for capital and maybe some re-structuring, please talk to Beer & Young. Investors are active in the turnaround market, businesses can be preserved and given the opportunity to recover, then return to profit.

Investing in Today’s Economic Climate

2009-08-14T13:08:00.000+01:00

In today’s uncertain financial climate with Bank lending having all but disappeared, great volatility in the World’s stock markets and interest rates and inflation at record lows, private investors have limited options available to them when it comes to investing their capital for maximum returns. They can gamble that the worst is over for the major stock markets, if their interest is in quoted companies, or for the more adventurous they can enter the world of small to medium sized enterprises (SME’s) and become a business angel and risk all for the promise of larger gains and more excitement by investing in start-up situations, or take less risk and lower rewards with more established SME’s who require additional capital for growth.

There is, however, an alternative that offers the possibility of greater rewards, increased participation, if desired, and more personal satisfaction and often with reduced capital commitment for a greater share in the company concerned. This alternative is to invest in ‘Turnaround Situations’ with established companies that have been hit hard by the present economic climate and cannot raise the additional finance required from traditional sources.

The companies in need of this type of finance are typically those businesses that have traded profitably in the past but for one reason or another now have serious cash flow problems. This might be due to a major client going bust, slow reaction to increased competition, late introduction of a new product or just tired management, to mention only a few.

The overdraft may be sitting at its limit, the Bank is unwilling to help and the directors may be unable to offer more security. The balance sheet is often fully geared and there may be creditor pressure or just a need for more working capital to operate through a poor trading period. The problem could be even more serious with solvency issues to address. These are good companies that for one reason or another have got into difficulties but with fresh ideas and new capital could once again prosper.

Investors are drawn to turnaround situations not only for the financial returns but often because they have experience in the market, can see synergies with their existing interests and can add value, not only by investing their capital, but also by strengthening the management team and harnessing their own network of contacts. In other words they can see that they can make a real difference.

The existing management team are happy as they too can see the benefits of new management skills coupled with new capital and especially as turnaround investors usually are not looking to take over the business.

Companies that could benefit from this type of funding, however, do not advertise the fact that they need help and so to find these interesting situations it is necessary to approach one of the few companies that specialise in this area. One such company is Beer & Young Limited.

Beer & Young is one of the UK’s leading providers of equity funding for small businesses. We have been delivering business finance, turnaround finance and company rescue solutions to companies in the small and medium business sectors since 1998 and have worked successfully with a number of PKF partners during this time. We are transactional based and as such are solely focused on the task that we have been engaged for, after which our involvement comes to an end. We exclusively operate the largest network of private investors who are active in turnaround situations.

We raise new money, mostly in the form of equity funds from business angels. We provide quick (or additional) business finance capital for businesses and, where necessary, help with cash flow and credit problems to aid with company rescue. We operate nationally and are proud to be known for our immediate response. Our reputation for quickly delivering business finance capital should assist negotiations in relieving financial pressures with institutions and creditors.

Our Head Office is based in the City of London. We also have regional associates spread right across the UK. Our associates have a wealth of invaluable experience, typically having run their own businesses and so from personal experience understand the needs of entrepreneurs particularly when faced with cash pressures. The majority also have banking or accountancy qualifications.

Companies and management under critical pressure need help, support and in short, solutions. Most business owners would agree that new money would certainly help to resolve the issues facing the business - money alone doesn’t provide all the answers, but when faced with cash pressures it will help relieve these and provide confidence to other stakeholders who are being asked to support the business.

Investing in turnaround situations is not risk free, far from it, but the financial and personal rewards cannot be matched in any other investment market. It provides an opportunity to add skills, experience and contacts to smaller companies, at a stage when such support is most needed. There is no charge to investors to gain access to our carefully selected clients.

Cash Flow Solutions

2009-08-14T13:05:00.002+01:00

Cash flow is the lifeblood of all businesses. As any small business owner will know, it is essential to be able to pay the staff, buy supplies/stock and to pay for the myriad other expenses with business finance. The problem comes when cash flow dries up. In most cases, when that happens, the first move should be to talk to the company’s bank. If the company in question has a good track record, a ’solid’ balance sheet and a reasonable order book, then the bank may well be able to respond. For example, the new Enterprise Finance Guarantee scheme under which the Government underwrites 75% of the loan to a business that meets all the criteria is, at last, yielding results, althoug the proportion being rejected is apparently much higher than for previous schemes.

It is when the bank has rejected an application for funds that the problems really begin. It then becomes essential for the business manager to know exactly where and what finance to look for, and how to present the case for funding in the best possible way. It is at this stage that, if the business owner/manager does not have experience in the world of commercial finance, things start to fall apart and business insolvency could follow.

The answer may be to find the best finance company to provide services such as invoice discounting or stock finance. Increasingly, however, the problem is one of escalating debt. In such circumstances the owner/manager will often find themselves spending too much time pacifying creditors and fighting off threats of legal action, whilst at the same time having insufficient capital to do the necessary marketing or even worse being unable to buy sufficient new stock.

Beer & Young Ltd can help by setting up an application for a Customer Voluntary Arrangement (CVA) on behalf of the company. This is a legally constituted agreement whereby the business undertakes to repay all of its creditors (at the time of the agreement) at an agreed rate over an agreed period of time. In return the creditors cannot press for earlier payment of the debt (unless the company defaults on the arrangement).

This action, of itself, can be enough to enable the business to recover. Alternatively, it may be combined with finding an investor to provide a capital boost. Investors are much happier to consider a company where they know that most of their capital will be used for growth and not for paying off old debts.

This article appeared in the Northampton Business Times.

Turnaround experts warn of bottleneck

2009-08-14T13:01:00.005+01:00

The following article appeared in the Financial Times in early March 2009:

Turnaround experts are warning that there could be a wave of business failures later this year because they are unable to get to these companies quickly enough.

Companies that specialise in rehabilitating businesses believe that they are only seeing a fraction of the companies in trouble because the sharp down-turn has left banks-which would normally refer cases to them for business finance -feeling overwhelmed.

The main concern is with companies in the £10m to £100m bracket, which lack the funding to employ turnaround experts who can work alongside management to restructure the business.

Christine Elliot, chief executive of the Institute for Turnaround, predicted that the problems with these businesses could ‘come home to roost’ in the third quarter of this year and into 2010.

“Members who deal with the mid-market are not getting to tackle some of the problems they know are out there” she explained.

Steve Benger, turnaround director at RFP Management, an independent practitioner, said: “My colleagues and I have got quite frustrated”.

An increasing number of accountancy and law firms are employing people with experience of turnaround work to help struggling companies recover before being pushed into insolvency.

Two thirds of insolvency specialists are involved in the restructuring or turnaround of struggling companies, according to R3, the sectors trade body.

Private equity firms are also getting in on the act. Beer and Young, for instance, claims to have a network of 1,000 business angels who offer their experience and money to breathe new life into struggling businesses.

Declan Williams, director of business recovery at Beer and Young, said: “Investors have always liked turnaround because they are perceived as less risky than investing in early stage businesses”.

But turning to new investors is not always attractive to business owners, who have to dilute their share holdings as well as admitting to their mistakes. “Most entrepreneurs have 100 percent of a lot of problems when they come to us” Williams said. “Much better to have 30 percent of something of value in the future”.

Alternative finance for businesses in distress

2009-08-14T13:00:00.000+01:00

What’s the answer if the cash flow has hit a brick wall and the bank has withdrawn any possibility of re-financing, or if your invoice discounting factoring options have disappeared? Even if the situation seems hopeless, there are still options open to you – but it’s best to know about them in advance rather than trying to find out what can be done at the eleventh hour. Experienced investor equity specialists like Beer and Young can help distressed companies find their way out of the darkness and back into the light.

Finding your way out of the woods
With the UK now formally in a recession and the real possibility of a prolonged downturn growing, many business owners will be asking what impact this will have on them and their ability to raise money when they need it. It has become extremely tough for all but the largest and most successful firms to obtain new bank funding. The government has tried to address the situation by re-capitalising the banks but there is no guarantee of how much of this cash will eventually flow into small companies – or when they will get access to it.

The good news is that there are alternatives and one of the best and easiest to access is investor equity. By far the largest investor network is managed by Beer & Young, a City of London-based Company, now in its eleventh year of trading, with a nationwide team of associates who are experts in raising equity finance. This network comprises over 1,000 private investors (sometimes referred to as Business Angels), all of whom have an appetite for investing in distressed and turnaround companies or those who have an urgent need for new capital

And their appetite to invest has not been quelled by the current downturn – indeed, they very much see the current situation as one in which many good new opportunities are likely to emerge. Over the past six months, investment sums ranging from £100,000 to £3 million have been made available.

Because of the scale of the network there is a solution for trading companies across all sectors nationwide. Typically these firms have turnover of £1 million up to £20 million.

Equity investment may not be for everyone of course. One of the perceived downsides is that the business owner has to give up some equity, which may be painful. But others see this as more palatable than no solution at all. After all 100 per cent of nothing doesn’t amount to a lot! Investors are looking to back committed management teams and generally do not want to take over the company. Hence it is rare that they will require a majority shareholding.

In addition to injecting new capital they can also add huge value in terms of their experience and contacts in the industry they are investing in. They are high net worth successful business people.

An All Round Solution

2009-08-14T12:59:00.001+01:00

Many problems in business are exacerbated by the reluctance of owners to face up to the real issues. But when a Bank decides it cannot lend more, owners have to rethink their strategy, which can lead to surprising results.

Beer & Young, the turnaround equity experts, often find that equity is only part of the solution – an Angel’s management skills and contacts may be more important than their money.

Equally, working with Beer & Young to present a case to investors can be the catalyst for a fresh approach, forcing owners to look objectively at both the business and their skills.

Outlined below is a case (names have been changed) where introduction of Beer & Young resolved the company problems without the need for equity.

MIDAS
Midas had two separate aspects to its business, marketing and publishing. Cash flow was tight and business difficult. Elaine, the owner and director, was concerned about her personal position. She was introduced to Beer & Young by her financial advisers because:

• Turnover was £1,500,000 pa and dropping
• Bank debt was £150,000 ,fully supported by Elaine’s personal guarantee
• The Bank was concerned about the credit and wished to reduce their exposure
• Management control of the two separate businesses was difficult and very stressful especially as Elaine’s skills were in marketing not publishing

Beer & Young were able to resolve all the issues:
• We found an investor wanting to merge the marketing business with his own. Unfortunately he did not want the publishing business.
• Midas instructed Beer & Young to sell the publishing business.
• We found a purchaser who bought the publishing business for sufficient to repay the Bank borrowing completely together with some of Elaine’s personal debts.
• With no debt and only one business to run, Elaine declined the investor offer and returned the marketing business to profit on her own.

Are Business Angels Still Investing?

2009-08-14T12:58:00.000+01:00

The current lending environment is the most difficult that the majority of businesses have ever experienced. Banks are being understandably cautious as the country enters recession.

Beer & Young, Turnaround Finance Specialists, keep pointing out that raising equity is the best alternative for many businesses. Angel investors have a higher risk threshold than banks and new equity strengthens the balance sheet.

But are Business Angels still investing in the current climate? The high number of our cases that have completed and are nearing completion is clear evidence that they are.

The example below (names have been changed) is one of our most recent completions. Beer & Young have found funding for this undercapitalised business supplying the retail sector.

ABC SUPPLIES

David had worked for 20 years sourcing clothing when he decided to develop his own brands. The business designs and supplies high quality equestrian and country clothing to 250 retail outlets across the UK. When David approached us his position was:

• He had remortgaged his home and injected more than £150,000 into the business which was high margin and profitable.

• The Bank overdraft was £30,000 and would not be increased.

• Debtors were already factored and trade finance facilities had been refused.

• He could not fund his new season stock from the Far East and Portugal.

Beer & Young were contacted from our website and arranged:

• Three investor meetings.

• Two offers of equity investment were received.

• The offer, involved a £230,000 injection of new funding from the investors, a mix of equity and unsecured loan funding.

• An additional funding line of £100,000 will be available dependent on performance.

Crisis Management in the SME Market

2009-08-14T12:57:00.004+01:00

One of the most challenging questions for any owner/manager in a small company is ‘how to deal with a financial crisis?’ e.g. the cash/overdraft is about to run dry/hit the limit and creditors are banging the door down. It would be pretty unlikely that the business plan (if there is one) identified the likely crisis and more importantly a strategy to deal with such a scenario.

It is not surprising that entrepreneurs always see the glass as being half full and therefore planning for a crisis is not be on the agenda. However, in reality things can always go wrong and often through no fault of the management/business owners e.g. a bad debt can easily wipe out your profits and put a business in a vulnerable position.

The key factor in a distressed situation where you are facing a cash crisis is to stay in control. This is of course easier said than done, as when the pressure mounts it is easy to end up ‘fire fighting’ and often the help that you presumed would be there simply melts away.

Sometimes ‘shutting up shop’ seems likely the only answer, but rarely is there a situation where a more positive outcome cannot be achieved by simply reviewing all the options available. In the last 10 years specialist firms have emerged to specifically help SME owner/managers in these circumstances. The solutions available will often involve putting workable recovery plans in place and introducing new investment into the business to restore financial stability.

Business Angel Funding - An Effective Alternative

2009-08-14T12:57:00.003+01:00

With widespread media coverage of the so called ‘Credit crunch’ and the sudden reduction in the general availability of loans along with the increase in the cost of obtaining them from the banks many businesses are looking for different forms of funding.

Increasingly, ‘business angel’ funding is being sought as a very effective alternative, with experienced entrepreneurs being willing to invest not only their money but a wealth of experience into companies that are fundamentally successful concepts but in need of a financial turnaround.

Beer & Young are the market leaders in turnaround funding in the UK and despite the current economic climate have successfully completed a number of deals during the summer months which have given companies a new injection of cash.

One such company to benefit was a Midlands based franchisor that had only been trading for a few months and was showing enormous potential, however it had technical problems with the design of the vending machines; plus the franchisor’s original business partner had problems of his own, that meant he could no longer supply development capital for the business. As a result the sales of new franchises had ceased, vending income was slow in starting-up and the company was in dire financial straights.

Beer & Young were able to introduce a private investor who not only provided the necessary cash, but who also took a significant management role, to replace that of the former partner (who was bought out). The cash injection allowed the company to pay off its most urgent creditors, improve the product offering and, with the continued help of an IIB consultant, to restructure the rest of its debt, so that it could continue to expand at its former rate.

Some good news for SME’s today!

2009-08-14T12:57:00.001+01:00

Whilst the banking community tighten their belts, it is clear that the business angel work is very much alive and active.

There is much doom and gloom in the newspapers at present and predictions are all offering tough times ahead for business community. And the ones that always seem to get hit first are the small businesses! Whether it’s a lifestyle business or a company employing 100 staff, the squeeze is on from the banks and that can lead to cashflow problems.

However there are some positives out there for those who seek them.

Specialist business angel networks that operate in the turnaround sector of the market are commenting that actually that there is more and more activity and money is available for the right businesses. Not all business angels operate like those on Dragon’s Den! Most are looking to add value to a business as well as invest their own money. Most are not looking to take control, they are backing the management team.

If the business has the potential to make profits in the future, the wise business owner will search for the active turnaround business angel networks and see what’s on offer.

Leading Turnaround Network opens new offices in Birmingham

2009-08-14T12:56:00.001+01:00

Read any business newspaper these days and it is difficult to avoid references to negative equity, higher prices on food and petrol and or course the credit crunch. As the economy threatens to move into recession and banks tighten their lending criteria many Birmingham businesses are struggling to raise business finance and in some cases are seeing their credit lines withdrawn altogether. It is therefore refreshing to hear a good news story which will benefit thousands of business in and around the Birmingham area.

Beer & Young, a national company with Head Offices in the City of London, specialises in raising new capital quickly for companies experiencing cash flow pressures, creditor problems and banking difficulties. The company which is celebrating its tenth anniversary this year is opening a new Birmingham office with the aim of helping the growing number of businesses in Birmingham and the surrounding areas who are cash starved as a result of the current trading environment and credit crunch.

Nicholas Young, Managing Director, has noticed a sea change in the needs of clients in 2008. “Over the past few years the market has been awash with easy and cheap credit but now we are seeing clear signs that the credit crisis which has hit the property market hard has spread to the small and medium business. More and more companies tell us that whereas last year the bank would normally extend the overdraft to ease a temporary cash flow today bank managers more likely to review the overdraft limits downwards, thus adding to cashflow pressures.

To meet the growing demand for equity B&Y has opened a new office located on the Birmingham Business Park near the NEC and a Regional Director, Brian Rutter has been appointed to spearhead this expansion. Brian says “we definitely want to hear from those companies who are experiencing cashflow difficulties for whatever reason this might be. We will always offer simple and practical advice and can raise new equity based capital quickly via our extensive network of over 1000 investors or business angels.

“We are also keen to hear from professional introducers who wish to work with us. B&Y has built its business almost entirely by personal referral and are comfortable working with bank managers, asset based lenders, accountants and consultants. We are definitely not in competition with these companies; indeed our belief is that we have a win, win, win situation. The client receives new equity capital and the bank/lender, accountant and consultant retain a successful client.”

Business Finance - We are living in a ‘Recovery Culture’

2009-08-14T12:54:00.002+01:00

June 2008

The first few months of 2009 will be remembered as a period of significant financial turmoil as the impact of the global credit crunch has been felt across the worldwide financial system. The impact on business finance for small and medium sized businesses has been felt in the past few months with liquidity becoming an increasing challenge.

The good news, however, is that the ‘recovery culture’ that has been established over the past 10 years or so, now seems to be fully embedded within the financial services sector. Institutional lenders are generally receptive to sensible recovery solutions and will not simply ‘pull the plug’ at the first sign of trouble. The bad old days of the late 1980’s and early 90’s seem to be well and truly behind us.

It should be noted that we also have to give the government credit where it is due and say that legislation and the attitude of HM Revenue & Customs (HMRC) has played its part. Their supportive and more flexible remit has seen them being prepared to agree repayment proposals when arrears have built up. Although HMRC don’t like transactional taxes (VAT/PAYE) being used to fund working capital requirements, they will often allow businesses the opportunity to trade their way out of a difficult period – plus there is little incentive to crystallise a ‘loss’ when a recovery plan looks viable.

We have also seen the emergence of specialist firms that provide effective recovery solutions for distressed businesses. These are not traditional Insolvency Practitioners but firms made up of experienced professional advisers who look to put recovery plans in place. These can often include the introduction of new ‘business angel’ investment, which provides the financial catalyst for ‘real’ recovery.

The emergence of the internet and the availability of information online have also positively impacted on the ‘recovery culture’. This can often be the route to find the specialist help and services that are needed when financial distress is encountered – asking your accountant or bank manager is no longer the only option.

A WINNING COMBINATION

2009-08-14T12:46:00.004+01:00

SME BANKING RELATIONSHIP MANAGERS + BEER & YOUNG - THE CATALYST FOR BUSINESS RECOVERY
We all need a little extra help sometimes – even some of the biggest banks in the world have had to raise business finance in 2008. But where do SME’s turn when the going gets tough and additional capital is needed to re-build their depleted balance sheet? This is where Beer & Young can be the answer. Since 1998 Beer & Young has been acting for undercapitalised SME’s who have often reached a critical point in their banking relationship. Beer & Young is focused on investor backed recovery solutions – the typical Beer & Young investor will be an experienced ‘Business Angel’ willing to invest in a turnaround situation or simply where urgent funding is required. Beer & Young is delighted to have forged close working relationships with many relationship managers across the banking community. Some, but not all, operate within the business support/special situations departments of the bank. The common characteristics of the accounts that are being managed tend to be:

Profitability has deteriorated and/or losses are accumulating

Liquidity is poor and the bank facilities are increasingly ‘hardcore’

Gearing has reached a tipping point where the bank is no longer comfortable

The above could be described as the ‘hard issues’, but financial ‘fire fighting’ takes an inordinate toll on business owners in terms of emotional energy and commitment. The old adage of ‘trying to see the wood for the trees’ is often very pertinent. This is an area where the hands on help and experience of a Business Angel investor can be invaluable. We all know about the problems that the global credit crunch has caused, but this has not affected the investor appetite for SME opportunities. Business Angels will make their own decisions as to how and when they invest – they see investing in businesses that have been successful in the past as far less risky than early stage/start-up situations. This is a counter cyclical market, where there is increased liquidity for turnaround/distressed opportunities. The upside for bank relationship managers is that there is access to ‘Business Angel’ funding for SME’s via specialist firms such as Beer & Young. We are always pleased to talk to bankers to explain our services more fully and listen to the views of front line lending managers.

Please contact our London offices on 0207 329 6886 to arrange a convenient appointment – please ask for Kylie van den Berg (kylie@beerandyoung.com),

Nick Young (young@beerandyoung.com), or

Declan Williams (williams@beerandyoung.com).

Article: Business Times Northampton

2009-08-14T12:45:00.001+01:00

The following article appeared in the Northampton Business Times of 17 March 2008:

"Financial distress through to Business Finance in the SME sector"

There are few things that are more challenging for entrepreneurs than constantly having to engage in financial ‘fire fighting’. A company with cash flow problems will be juggling every cheque it receives in an effort to stay within the overdraft limit, pay its creditors, maintain supply, and on top of all this pay overheads and salaries. As well as being extremely stressful, this distracts SME business owners from the really important issue of keeping the customers happy – getting products out the door or delivering the services that they should be.

There are many businesses that find themselves in this situation but simply haven’t got the appropriate skills to deal with this level of distress. This is not a criticism, directors don’t plan for the company to ‘hit a financial brick wall’, but will often leave it very late before seeking the help that is available.

The good news is that there are some well established specialist firms, like Beer & Young Limited (established 1998), who can provide robust recovery solutions, which will often include the support of ‘business angel’ investment. This presents distressed businesses with an opportunity to recover with the benefit of an experienced entrepreneur who will also make a financial commitment. This is viewed as less risky by many investors as they see troubled businesses have been successful in the past, and with the injection of some fresh capital and expertise they can be successful again.

The key is to try and stay in control of the situation and seek help quickly. Major stakeholders (including banks and HMRC) are supportive of sensible recovery plans based on sound professional advice.

Please see the Beer & Young website: www.beerandyoung.com/case-studies.php for case studies and testimonials. They can also be contacted direct on 0207 329 6886.