Insights
By: Simon Boadle
Engage corporate finance advisers two years before a transaction
Businesses benefit from early strategic preparation
It is essential to engage a corporate finance adviser well in advance when planning a corporate event, according to Simon Boadle, Executive Chairman of Stonehage Fleming’s Corporate Finance business.
“Advisers add a lot of value, provided they are well briefed and given tailored roles,” he told guests at our Entrepreneurs’ Forum in London this week. “Corporate finance advisers help businesses with the decisions they need to make a good two years – sometimes up to five - before a transaction,” he said.
One reason for this is the number of different options for a liquidity event, be it refinancing through debt, an IPO, a partial sale through private equity or a full sale to trade, explained Simon. “Understanding which of these is a practical possibility and at what sort of valuation or what sort of consequence for the business is really important to establish early on. You can then map out a strategy for achieving the right one.”
According to Simon, planning is key: “These liquidity events, like taking on new investment or selling, are life-changing for a business. They happen very rarely, so it is important to get it right and get a good strategy mapped out a long way in advance.”
Planning a strategy for reviewing the Board or revisiting how to run the business to prepare for the future is vital, explained Simon. “If you want to achieve an IPO in three years’ time, there are certain things you can do to shape the business to make it more attractive to stock market investors,” he said. “You may also want to present the business differently to an audience of potential investors. Your corporate finance advisers can help you with this strategic planning.”
Made up of a corporate financier, a lawyer, an accountant and tax adviser, Simon explained the huge importance of the ‘core’ advisory team for a business involved in a transaction. “The other specialists in the advice chain also play essential roles,” he said, “but the difference between them and the corporate finance adviser is that most are engaged only when a tangible transition is in the offing. Corporate finance advisers work predominately on a success fee basis. A lot of the early planning can be done either for effectively no cost, or be rolled up into a fee payable later on. That is another big attraction for entrepreneurs.”
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