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TheBusinessDesk.com Supplement | WEST MIDLANDS | March 2016

Going for growth

Featuring

Family business

growth. 4

Technological

innovation. 8

Round table

discussion. 13

in association with


DRIVING

PRIVATE BUSINESS

West Midlands Supplement

March 2016

Contents

Sponsor forewords:

Growth through investment and support -

Peter McLintock, partner, Mills & Reeve;

The opportunity for growth - Ian Greaves,

partner, KPMG.

3 ➔

Financing family business

growth. Does a desire

to retain control within

the family means some

successful businesses forfeit

their growth potential? 4 ➔

Case Study: Beckett’s Farm sows seeds of

growth with acquisition. A Birmingham

agribusiness has purchased a new farm,

increasing its total acreage by 12%.

6 ➔

Profiting from

technological innovation.

Innovative technology is a real

driver of business growth

and opens new doors to

customers.

8 ➔

Case Study: Midlands motor

manufacturers awarded £31m to develop

greener technologies. A consortia of

Midlands motor manufacturers has been

awarded £31m of government money to help

develop new vehicle technology. 10 ➔

Ahead in the cloud. The cloud and mobile

technologies are low cost and accessible, so it

is no longer such a leap for businesses to give

their implementation a try.

11 ➔

Round Table discussion:

Private talks.

At the top end of the SME

market and in the mid-market

private businesses have a

different set of issues to startups

and large companies.

13 ➔

Cornwall House, Lionel Street,

Birmingham B3 1AP.

Commercial director: Lee-J Walker

leej.walker@thebusinessdesk.com

Publication editor: Joanne Birtwistle

joanne.birtwistle@thebusinessdesk.com

Deputy editor: Duncan Tift

duncan.tift@thebusinessdesk.com

2

Editor

Foreword

Dealing with

growing pains

THE regional economy is

increasingly referred to as the

Midlands Engine, a nod to the area’s

manufacturing past, present and

future.

But for that engine to fire up in the way

that the Government and business leaders

want it to, it will need the driver to be private

businesses, perhaps most crucially those mid-tier firms with ambitions to

grow.

They will need help to do so because they face significant challenges in areas

such as finance, succession planning and agreeing a strategy for growth -

particularly pertinent issues for family businesses.

And to succeed private businesses of all shapes and sizes will need to get it

right in attracting, retaining and maximising talent.

There is widespread enthusiasm for the ideas and impetus that graduates

can bring to companies. Yet businesses can struggle to align themselves

with universities to help mould undergraduates before they enter the job

market, while the attraction of London and the South East remains a strong

pull when they do.

Lack of talent is an inhibitor to growth, and is also a challenge at senior

levels, although the increasing number of people returning to the region

in the middle and later parts of their careers is growing the talent pool for

experienced business leaders.

It is their experience that enables private businesses to develop, whether

looking for growth through acquisition or organically, with overseas

markets a key opportunity for Midlands-based manufacturers.

To do that businesses often need access to finance and for one particular type

of private business - the family business - ownership priorities can mean

business owners will not consider certain funding avenues.

The result can be that the business’ potential is either never realised or will

take generations. It’s a dilemma we look at within these pages.

Being fleet of foot allows companies to make the most of disruption through

technology and to seize the moment when the opportunity arises.

It’s another area that is unfamiliar territory for many, making it easy for any

decision on technological investment to be put off for another day.

But as big name business failures attest - think Blockbusters - technology is

moving apace and businesses that want to grow cannot afford to stand still.

These are all big challenges, affecting private businesses of all sizes, but

meeting those challenges also brings fantastic rewards. As the businesses

we have featured demonstrate, the region has the companies and leaders

that can rise to meet that challenge.

Duncan Tift, deputy editor,

TheBusinessDesk.com

– West Midlands

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Land of opportunity

3 Sponsor forewords

Growth through investment and support

Peter

McLintock

partner,

Mills & Reeve

IF, LIKE me, you

were mesmerised

by the BBC’s excellent

documentary, The

Hunt, you will have

observed that the

secret to survival

and prosperity for

those that might

make a tasty meal

for hungry predators

is to face down the dangers, confidently

working as a team and not allowing

yourself to become isolated and

outflanked.

Business can be a bit like that,

particularly for mid-sized businesses

that have grown to a certain size but

are capable of more – a segment that

accounts for a quarter of the UK’s

revenue.

They have been battered and picked

off during the recession and those

that have emerged intact are looking

to an era that promises growth and

opportunity if the challenges, that still

exist, can be met and a growth agenda

is adopted.

Mills & Reeve set out to talk to a large

number (500+) of the leaders of such

businesses to understand how they are

feeling.

The overwhelming sense is that there

is emerging confidence, albeit still

fragile, but a growing belief is taking

root that sustainable development

can be achieved with the right levels

of investment and support. Some

are clearly commissioning strategic

projects that have been in moth-balls

for years and restoking the furnaces,

sometimes literally.

Yet a third did admit to a lack of

knowledge as to how to go about a

growth strategy and as many as a third

asked thought it might be easier to put

their business up for sale. For these the

predators will be circling!

The opportunity for growth

Ian Greaves

partner, KPMG

KPMG Enterprise is

dedicated to working

with private

businesses, from

entrepreneurs to

family businesses

and the mid-market

companies that form

the beating heart

of the Midlands

economy.

Undoubtedly the Midlands economy

is on the up - we have some of the

best universities in the UK and a

growing business community,

which is delivering some of the most

innovative training and development

programmes in the UK. Corporates

such as HSBC are moving to

Birmingham because our region is

recognised as a hub for talent. For midmarket

businesses, this can only be

positive and create significant growth

opportunities.

However, in our conversations with

the mid-market, we regularly see two

themes emerging as being absolutely

crucial – both in terms of opportunity

and threat - to the achievement of their

growth objectives: technology and

talent.

When it comes to growing a business,

the status quo will not work for long,

and one of the most significant and

fastest-changing areas is technology.

Innovation and utilisation in this area

undoubtedly can be a transforming

force.

In many cases, there are cultural,

financial and skills hurdles to

overcome in order to fully harness

technology to fulfill commercial

potential. Equally, private businesses

across the Midlands are incredibly

well placed to carve out a competitive

position, using technology to bring

their often specialised products and

services to global markets.

Attracting and retaining the right

talent meanwhile, as our round

table conversation suggests, is an

increasingly pressing matter. Growth

in the appetite of businesses to invest

in securing the skills they need

to prosper has driven heightened

competition in the recruitment market.

Indeed, I believe, in the context of skills

shortages, the dramatic ‘war for talent’

phrase rings more true than ever.

Private mid-market businesses across

the Midlands will need to focus on

the full breadth of their appeal in

order to win this war against the

biggest blue chips. From articulating

the scale of career opportunity

to offering attractive reward and

incentive packages, and demonstrating

transparent and inclusive cultures,

their size and flexibility can often prove

a strong hand.

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➔ 4

Financing family

business growth

FAMILY businesses are by no means small businesses - many

of them have passed through several generations to grow

into significant employers with impressive turnovers and real

standing within their communities.

Does a desire

to retain control

within the family

means some

successful

businesses forfeit

their growth

potential?

But they are very different to other

private businesses - decisions are

not purely geared to profitability and

there are issues around maintaining

harmony within the family.

Narinder Paul, tax partner at KPMG,

says: “The biggest hurdle is getting

consensus from the shareholders and

family members. What does each

shareholder/family member want?”

As a business goes from a start-up to

the second or third generation it is a

challenge to get what

everyone wants.

Jason Wouhra

director, East

End Foods

“One of the biggest

challenges is that

they all understand

where the business

wants to get to and

that they all support

it. The family needs to

be united in that.”

Family business transcends a corporate

entity’s goals of wealth and profit. It is

often viewed as part of the family and

can be run for reasons of philanthropy

or status in the community but at the

same time, those running the business

often feel they are a custodian or

guardian of the family wealth.

‘As people age their attitude to risk changes. It

becomes more about protecting the wealth they

have made and they don’t want to do anything to

topple the cart.’

Jason Wouhra, a director at

Birmingham-based family business

East End Foods, says: “As people age

their attitude to risk changes. It becomes

more about protecting the wealth they

have made and they don’t want to do

anything to topple the cart.”

That level of prudence can mean that

when it comes to driving growth,

there is can be a reluctance to bring in

external investment.

Bank debt is the most readily available

and popular form of funding for ➔

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Narinder Paul

tax partner,

KPMG

family businesses.

From the business’

point of view, it

doesn’t require a

divestment of equity.

For the banks, as

family businesses

generally do retain

the profits and

property within

the business, they

usually have decent asset base to

leverage.

But there are other funding options -

Prof Arif Khurshed, professor of finance

at Alliance MBS, challenges the widely

held view that family businesses

largely do not wanting to give equity.

“I think many family firms are not

averse to giving small amounts of

equity,” he says.

because it is a direct investment – it can

often be a good solution rather than a

blind investment in bonds or putting it

behind a private equity house.”

Paul adds that shares in family trading

companies can be very attractive as

they are free from inheritance tax

providing certain conditions are met.

“Providing finance by subscribing

for shares in family businesses can

attract tax benefits under the Enterprise

Investment Scheme, again a number of

conditions need to be satisfied,” he adds.

Family Business Place, itself a family

business, works to raise the profile of

family firms across the UK, holding

regular events, and supporting them

East End Foods’

Wouhra says: “How

can you improve the

skill sets? You can

bring in non-execs

and consultants to

help you to the next

stage of growth.

“The growth agenda

should be set by the

board but in a family

scenario you need to

look at the make-up

of that board.

Anita

Brightley-

Hodge

managing

director, Family

Business Place

“The danger is that on the board you

get groupthink and one person is

dominant.”

Private equity firms are not always

seen as a suitable match for family

businesses, which

generally take longer

term decisions

and have longer

horizons. But Prof

Khurshed points to

a growing appetite

for cornerstone and

Prof Arif

Khurshed

professor of

finance, Alliance

MBS

strategic investors –

be they organisations

or individuals.

For a family-owned

business selling

shares to a private

investor, such as a high net worth

business angel, there is an affinity

as these people have themselves

been running businesses with a

commonality.

KPMG’s Paul says: “High net worth

individuals are often entrepreneurs

who are interested in businesses for

the long term. They may be looking at

their options for investing in the stock

market – which are up and down, while

the banks are offering a low return.

[They] see family businesses as a safe

option, it is a means of diversifying their

investment portfolio.

“They are able to take a much more long

term view, over a much longer period.

Where it is a family business that has

been going for five or six generations,

that has got to be right.”

Peter McLintock, partner at law firm

Mills & Reeve, agrees that angel

investors are a good option for family

firms. He says: “They do tend to be quite

benign and none interfering. They like it

‘An investor from a family background gets it;

you can have easier conversations than with nonfamily

investors. They understand the long term

value of investment.’

with marketing and branding.

It is setting up an investor network,

recognising the different investment

needs a family business may have and

partnering them with investors that

may themselves have come from a

family business background.

Managing director Anita Brightley-

Hodge says: “People want to invest for

tax reasons and to help another family

business. An investor from a family

background gets it; you can have easier

conversations than with non-family

investors – with options to buy back,

for example. They understand the long

term value of investment.”

Prof Khurshed adds that there has been

a push for the Government to look into

investment from pensions and hedge

funds into private businesses.

“It has not traditionally been available

but these investors are so large, if a

small percent was put into private firms

rather than just the stock market, it

would have a great impact,” he says.

Of course family businesses are not all

run by family members and it is useful

for them to bring in non-family nonexecutive

help to guide and add value.

The findings of the latest European

Family Business Barometer research

from KPMG and European Family

Businesses (EFB) were published last

year.

The research shows that the war for

talent is particularly high on the agenda

in the UK, where 56% of family business

leaders referenced concern about their

company’s capability in competing to

recruit and retain skilled staff.

Paul of KPMG says: “The UK data

signposts increasing difficulty in

securing and retaining the talent and

skills family businesses need to grow.

“Family business ownership

structures can make competing to


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‘People do have to feel a sense of ownership

to give the best of themselves.’

Peter

McLintock

partner,

Mills & Reeve

recruit, select and

retain exceptional

individuals a

particular issue.

Some may need to

focus on developing

motivational offers

for the very best

employees.”

Sometimes there

can be issues around the promotion

of family members. Family members

who are brought in to senior roles have

a job in proving that they merit the role.

Mills & Reeve’s McLintock says: “Often it

works best when the junior members

are externally trained to come in to the

business with other outside experience.

“One client had two sons who went to

Harvard and then worked at Goldman

Sachs before going into the business.

They have had to work their way up

and earn the right.”

McLintock adds that when it comes

to running down the generations,

the further you go the more likely

a business is to take professional

managers in the boardroom.

Yet, a family business’ unwillingness

to give shares to senior management

when looking outside of the family for

skill sets does close off some talent.

McLintock says: “When there is a very

successful family business with no

intention of changing its structure they

do have to fight against the perception of

there being a glass ceiling and find other

ways, such as money to incentivise. But

people who do feel a sense of ownership

tend to give the best of themselves.”

KPMG’s Paul adds that whilst there is a

reluctance to give shares and certainly

There are 3 million family

businesses in the UK, 15,000

of which are medium or large

enterprises. They employ 9.4

million people and generate a

quarter of UK GDP.

Source: European Family Business

Barometer

voting shares, he is seeing businesses

starting to give growth shares.

“There is some change in mindset and

a recognition that they need to entice

in excellent management. Big bonuses

and large pay packets are not enough –

senior executives want to be part of that

company‘s growth,” he says.

Case study

Beckett’s Farm sows seeds

of growth with acquisition

A BIRMINGHAM agribusiness has

purchased a new farm, increasing

its total acreage by 12%.

Third-generation family business

Beckett’s Farm - well-known locally

for its restaurant and farm shop

- has added the site to its existing

premises in Wythall, growing the

total area to in excess of 1,200 acres.

The new farm will also increase the

number of buildings available for

commercial letting.

Beckett’s Farm, which employs

114 people, has diversified its

offering to include cereal farming,

conferencing, commercial

renting of farm buildings and the

aforementioned restaurant and

shop. The family opened the Orange

Kitchen cookery school in 2008.

The farm was established in 1937

by Albert Beckett, the grandfather of

current managing director,

Simon Beckett. Beckett’s originally

started as a dairy farm, then moved

to large-scale egg production. The

business now supplies cereal to a

number of major brands.

Yorkshire Bank provided 100%

funding for the premises in a multimillion

pound deal.

Gareth Jones, head of commercial

& small business relationship

management for the Midlands at

Yorkshire Bank, says: “Beckett’s

Farm is a fantastic example of

an agribusiness diversifying its

offering to maximise revenue,

during a time when the sector is

facing major challenges.”

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Have you

harnessed the

potential of

your team?

Our recent Enterprise Barometer survey

aims to understand employee attrition

and takes a look at how employers

retain their staff and what

motivates them to stay.

For a copy of our survey or to discuss

retaining talent contact Stephen Craik,

Partner, KPMG Enterprise

E: stephen.craik@kpmg.co.uk

T: +44 (0) 121 609 5805

kpmg.com/uk

© 2016 KPMG LLP, a UK limited liability partnership and a member firm of the KPMG network of independent member firms

affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved | CRT048579


➔ 8

Profiting from

technological

innovation

THE retail sector has seen changes driven by technology

possibly more than any other – particularly at the customer

facing front line, where making the experience as easy and

enjoyable as possible is what drives growth.

Innovative

technology is

a real driver of

business growth

and opens doors

to new customers.

Because it is at the coalface, technology

innovations first tested in retail often

filter through to other industries.

Nathan Cain, partner at KPMG, says

retail has seen a huge amount of

disruption. “The low barriers to entry

in that market are a reason for that,” he

says.

Those that are thriving in this

traditionally tough market of high

competition and low margins are

largely those that have welcomed

technological innovation as an

opportunity to drive

profitability.

Nathan Cain

partner, KPMG

“It is an area where

you can focus efforts

on a demographic.

The younger

demographic is

expecting digital

innovation all the

time. It means you can start with

something brand new and it can take

off,” adds Cain.

The list of technologies that have had

an impact on retail in recent years are

near endless – from the obvious rise of

online shopping and the encompassing

logistics that sit behind that to smart

changing rooms to in-store beacons

which recognise shoppers from their

mobile device and send offers to their

phones.

Cain says: “A lot of incumbents have the

benefit of bricks and mortar – yes it can

be a ball and chain but also customers

still like to touch, feel and try on – they

want to interact physically with what

they are purchasing.

“It’s about working out an omni-channel

presence – the really successful ones

are the ones that provide a completely

seamless offering. Try on garments in

store, buy later online when at home

and then return them to a different

store.”

But Cain emphasises that innovation

and technology to drive growth should

not just sit at the front, customer facing

end; it must go hand in hand with back

office innovation.

He says: “All businesses need to

connect the two. Without having the

back office ready and able people will

find it impossible to offer a seamless

customer experience. It is the logistics

that sit behind that which provide the

experience.

“Work out what you need to do

throughout your whole organisation to

make the technology drive growth. ➔

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All too often people think it is the

website, or the next app, but unless the

back office can’t keep pace it is not going

anywhere.”

Big data is becoming critically important

to all businesses – both in terms of

analysing internal performance data

to make informed decisions and in

understanding who the customer is

and what they want.

The collection of customer data started

in 1995 with Tesco’s Clubcard and has

since evolved into the mining of that

data to further improve and personalise

the customer experience. But with the

ownership of a customer’s personal

data comes responsibility.

businesses have at last been saying ‘I

need to grow’.

He says: “In the Midlands technology is

driving a surge in advanced engineering

and manufacturing techniques. It is an

important part of how the economy is

readapting and becoming less reliant on

the service industry.”

He gives the example of a scrap metal

client, which implodes metal objects

using machines called fragmentisers

which sorts the component metals and

parts into different skips.

“It means the scrap can be sold at raw

material price and there is hardly any

waste. Technology is changing how

things are done,” he says.

Yet it can be hard to know what the

right investment is in order to garner

growth; what will work and ultimately

drive the business forward?

A new technology is not always proven,

particularly if it is truly innovative – but

that is how breakthroughs occur and

new markets are found.

“There are a lot of new ways of doing

things that will be adopted in the near

future – there are surges because a lot of

things are held back

– take the technology

on a smart phone,

that is held back by

battery power,” says

McLintock.

A technology

Peter

investments should McLintock

have a clear goal in partner,

mind that is clearly Mills & Reeve

linked to the overall

strategic goals of the business.

“Do you want first mover advantage

or is it better to be a follower?” asks

Cain. “My perspective is to think

ultimately about what it is you are

trying to achieve and then look at what

technology can do to assist with that.”

When it comes to selling a business

though, those that have adopted a new

technology quickly have a very good

chance of attracting tomorrow’s price

today.

McLintock concludes: “From a deals

point of view, other businesses will pay

a price for a business with advanced

technologies because they see that

they can take that technology into their

own business – it becomes a strategic

acquisition, not a nice to have.”

“From a security point of view in the

digital age, there is nothing that will

destroy a brand more quickly than a

lack of security,” says Cain.

“People rely on Amazon and Paypal

– they have all our information.

That provides a seamless customer

experience but it would only take one

breach of security and we would all

very quickly think twice about that.”

‘From a security point of view in the digital age,

there is nothing that will destroy a brand more

quickly than a lack of security.’

He says businesses across all sectors

are talking to KPMG about securing

their data and that, following recent

high profile cases in the news – most

notably TalkTalk, it is suddenly on the

board agenda more than ever.

“There are those that have had a bad

experience and are shutting the door

once the horse has bolted. But more

and more are talking to us because

they don’t understand what they need

to do in this space. They know that they

don’t know and want us to work with

them to identify what they should put in

place,” he says.

For many businesses investment in

technology has until now been about

helping to cut costs and drive efficiencies

whereas Peter McLintock, partner at

Mills & Reeve, says that in the last year

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➔ 10

Case study

Midlands motor manufacturers

awarded £31m to develop

greener technologies

A CONSORTIA of Midlands motor

manufacturers has been awarded £31m

of Government money to help develop

new vehicle technology.

The partnership includes The London

Taxi Company, Morgan Motor Company,

Jaguar Land Rover and Parker Hannifin,

together with AGM Batteries and other

partners.

The firms have been charged with

delivering innovation in lightweight

advanced diesel engines, high

energy density batteries, hybrid light

commercial vehicles, fuel efficient

hybrid engines, and energy efficient off

highway vehicles.

The overall project is part of a £74m

match funding programme and is being

led by the University of Warwick-based

Advanced Propulsion Centre (APC).

The development programme would

be split into five separate projects. They

comprise:

A £2.9m project, led by the Parker

Hannifin consortium, intended to

improve the efficiency of electric forklift

vehicles by reducing carbon output and

improving fuel consumption.

An AGM Batteries-led consortium

which will work on a £5.4m project

to develop the next generation of

battery packs for high performance

low carbon vehicles. This will help

generate carbon and fuel savings.

A consortium led by Morgan Motors

will develop new, greener propulsion

systems for its future vehicle range

as part of a £6m programme.

The new powertrain will reduce

carbon emissions and improve fuel

consumption.

A London Taxi Company-led

consortium is working on a £46.5m

Coventry-based project to fund

research and development for

zero-emissions hybrid propulsion

technology. The project will enable

LTC and its partners to significantly

increase the amount of UK content

into vehicle powertrains.

An innovative £13.1m consortium

project, led by Jaguar Land Rover that

researches advanced combustion

and leading edge boosting systems

supporting the automotive

turbocharger supply chain in the UK.

As part of their submission each

consortium must provide a forecast

for the creation or safeguarding of

UK jobs, targeted carbon dioxide


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eduction and the value for money of

their project.

Combined, the five new projects are

forecast to create or safeguard more

than 850 jobs, while carbon dioxide

emissions will be reduced by 4.3

million tonnes.

Jon Beasley, director for technology and

projects at APC, says the announcement

of the latest schemes to benefit from

the funding is an indication of the

Government’s intent to support low

carbon Advanced Propulsion System

innovation.

“Co-investment in technological

developments to be delivered by

industry-led consortia range from

high risk incremental growth

programmes to innovative cutting edge

R&D, showing the UK is committed to

establishing itself as a global centre for

the promotion and development of low

carbon propulsion systems,” he says.

This latest announcement comes just a

month after the Government committed

a further £35m towards the next round

of the APC 5 fund.

He adds: “The data may be very

secure sat on the cloud but the

access points you allow are the

weak link. Organisations need to

understand the limitations of the

security of those

environments.

“Data security

and protection

is a big issue for

anyone who

handles client

money, including

law firms. But

even if you hold

data on your

own servers you

Peter

McLintock

partner,

Mills & Reeve

Ahead in the cloud?

THE cloud and mobile technologies

are low cost and accessible, so it is

no longer such a leap for businesses

to give their implementation a try.

Peter McLintock, partner at Mills

& Reeve says: “The cloud offers

businesses great cost savings with

lots of potential to run a business on

a lean basis. You can outsource lots

of infrastructure through the cloud.”

It works really well where staff

across numerous different locations

/ time zones need to collaborate

on one project – shared across a

common server.

But McLinock warns that the use

of software as a service and cloud

platforms carry risk.

are not safe from cyber piracy.

“Compliance and risk didn’t used

to be taken too seriously but now

it is a top item – are our systems

robust? Are we exposed?”

‘The cloud offers businesses great cost

savings with lots of potential to run a

business on a lean basis.’

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full scale

ahead?

44% of business leaders believe it has never

been so hard to grow their business year

on year yet 94% feel confident they could

scale up with the right support and advice,

according to the 500 business owners we

spoke to in our Full Scale Ahead report.

One of the most challenging questions facing any

mid-sized business owner is whether to go for a profitable

sale in the short term or steady growth over the long term.

Each path has its issues – scale up too quickly and you

may risk it all, sell too soon and you may never realise the

potential within the business.

Our expert team of lawyers provide simple but extremely

effective solutions for the legal issues facing companies

and their owners deciding whether to scale up or sell in

order to maximise the value of their business.

To find out more get in touch:

Peter McLintock, Partner

Telephone 0121 456 8354

or email. Peter.McLintock@mills-reeve.com

Join the debate at:

www.fullscaleahead.co.uk.

foresight

Fast foward thinking from Mills & Reeve


13

Round

table

Private talks

AT THE top end of the SME market and in the mid-market

private businesses have a different set of issues to start-ups

and large companies.

Midlandsbased

private

businesses

discussed growth

opportunities and

barriers at our

round table event.

Yet those issues are often overlooked

as many advisory firms, funders and

investors focus on firms at the top and

bottom of the food chain. In political

phraseology we are talking about a

‘squeezed middle’.

“It does depend on the market you are

in. The marketplace for us continues

to expand in terms of the diseases

we are looking at. It is a question of

continuing to grow that and looking for

adjacencies.”

said that, to date, their growth has been

organic.

But the more enlightened professional

services businesses - such as

accountancy and advisory firm KPMG

and law firm Mills & Reeve - realise

that many of our most ambitious and

dynamic companies fall into this middle

ground and it was to discuss their

ambitions and frustration that they

came together with a number of such

companies at KPMG’s One Snowhill

headquarters in central Birmingham.

In terms of growing through

acquisition, de Rohan said: “There is a lot

going on. The appetite for some risk has

“But it is advisable to look at other

companies as a means of growth,” he

said.

‘As with any business you look at what you

are good at and see whether there is growth

potential there.’

The assembled group first of all

considered options for growth.

Charles de Rohan from Birminghambased

biotech company The Binding Site

said: “As with any business you look at

what you are good at and see whether

there is growth potential there.

come back. Some private equity firms

are outbidding the corporates.”

Craig Wright of Burton-based Wright

Industries - which has invested in a

number of manufacturing businesses -

Deborah Leary OBE, who set up and

runs forensic service group Forensic

Pathways from central Birmingham,

said: “We’ve gone for organic growth.

We have debated about taking it to


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another level but the technologies we

have got have started to fly and we

want to look at these before we expand.

“We have got an open mind on things

such as seeking a listing but within

three months we could be in a very

different position.”

Andy Lyndon of private equity firm

LDC revealed his firm has 30 Midlands

businesses in its portfolio.

“We look for a strong organic play and if

we can enhance that through buy and

build then fine but it shouldn’t just be

acquisition-driven growth,” he said.

Talking about the businesses his firm

has invested in, Wright of Wright

Industries said: “In most cases the

businesses we were talking to between

2010 and 2013 were stagnant. The

shareholders were aged and should

have got out two years earlier.

The

Attendees

Charles de Rohan,

CEO,

The Binding Site

Ian Greaves,

partner,

KPMG

“They get a lot of management input for

us because often there is no succession

plan in place. We provide the mechanics

for them to exit with confidence.

“We work hard on an organic growth

strategy and on people development. It

is a professionalisation of the business.”

Ian Greaves, a partner at KPMG,

identified with what Wright is saying.

“We get high growth companies

pushing hard and also mom and pop

businesses happy with their lot. Neither

is right and neither is wrong,” he said.

“I do find that most businesses, unless

they are in a high growth phase, don’t

always have clear strategy until a key

event occurs. Maybe someone in the

family falls ill or someone shows an

interest in the business.”

Peter McLintock, a partner at law firm

Mills & Reeve, said: “I do like Charles’

point about acquisitions needing to be

additive. You can destroy value with the

wrong acquisition.

“We went to 500 mid-sized businesses

for our research ‘Full Scale Ahead’

which is about scaling up. One of the

most startling things is the number

of people who don’t know what to do

about growth. About a third thought

about selling the business because

they didn’t know how to grow it.

‘We get high growth companies pushing hard and

also mom and pop businesses happy with their lot.

Neither is right and neither is wrong.’


Deborah Leary OBE,

CEO,

Forensic Pathways

Andy Lyndon,

director,

LDC

Peter McLintock,

partner,

Mills & Reeve

Jason Wouhra, director,

East End Foods/ regional

chairman, Institute of

Directors (IoD)

Craig Wright,

chairman and CEO,

Wright Industries

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McLintock at Mills & Reeve believes

the approach of funders needs to be

examined.

He said: “The finance and investment

money available to help businesses to

grow is not entrepreneurial at all, with

the exception of private equity, probably.

It is too plain vanilla.

“It is still too much of a box ticking

exercise for banks.”

But de Rohan at the Binding Site said: “If

you are a successful business you won’t

find barriers to finance.”

Being able to recruit the right staff -

often when in competition with larger

businesses - can also be seen as a

barrier to growth.

De Rohan said: “We will add another

60 people in the next 12 months. Half of

them may be local.

‘There is still a perception that London

is the place to go. But growing companies

are changing that.’

“We want to help businesses consider

all of their options.”

Leary at Forensic Pathways said: “There

is a huge education piece for SMEs.

People don’t talk to them about why

they are doing what they are doing.”

Greaves at KPMG said: “I echo that. I see

a lot of SMEs where one person says

what is going to happen and others go

with the flow.”

Exporting has become a key tenant of

many businesses’ growth strategies.

De Rohan said: “Our overseas strategy

includes growing the markets we

are in now. But we are not yet in

Latin America and China. There are

regulatory hurdles. We are two years

away from having products registered

in China.

“Certainly there is an outlay. Investing

in finding the right partner is important,

as is finding your own people.”

Leary said: “We are very focussed

rather than reactive. We have just

signed a four year deal through our

distributor in France.

“And South Africa has been a good area

for us.

“Around 55% of our business is

international. The US is our next target

market. It is way behind us in digital

forensics.”

Lyndon said: “Often customers take you

into their territories.”

Jason Wouhra, a director at

Birmingham’s East End Foods, admitted:

“I’m not sure we do enough. Exporting

is only 20% to 25% of our turnover.

“We’ve actually sold spices to India but

Europe is the big opportunity. It is going

the way the English market did 20

years or so ago. We are starting to do

quite a lot in places like Scandinavia.”

In terms of barriers to growth, Lyndon

at LDC suggests some of it is within the

companies themselves.

“It is very interesting in some of the

deals we look at,” he said. “It could be the

first time they’ve assessed the business.

It might be about whether they have

the right board composition, and if the

wealth is tied up in the business have

they become risk averse?

“People don’t want their money to be

gambled away and they don’t want to

lose millions on an acquisition gone

wrong.”

“It’s not a failing of the education system

necessarily. From a local perspective

there is great talent - there are four

great universities and a great hospital

down the road.”

Greaves at KPMG said: “We recruit a

lot of people but a lot of graduates leave

Birmingham. There is still a perception

that London is the place to go. But

growing companies are changing that.

“We are now taking on school leavers as

are the big law firms.”

East End Foods’ Wouhra, - who is also

regional chairman of the Institute of

Directors (IoD) - said: “At the IoD we

have been mentoring students. We

have mentored about 150. The mentor is

usually the business owner and usually

they end up taking them on.”

Lyndon at LDC said: “It is a universal

challenge to get the right people. It

can be done via options or the equity

pool. It’s about making people feel they

belong.”

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