Browsing through the business pages last week, I was interested to learn of the volume of capital being placed into UK start-ups. We’ve always been ahead of our European cousins and this continues to be the case. What’s interesting in this year’s figures is how much capital is now coming in from overseas.

 The Times commented: Britain leads Europe in attracting venture capital investments with over $15 billion in investment to young, high growth British start-ups this year. This puts Britain behind only the United States and China. UK investors accounted for 31% of the investment, so the international community is overwhelming investing into British start-ups, this shows that the British market is attractive despite the current domestic economic struggles. 

 What is less clear is how much private investment capital is going into trading SME’s. And I’m not talking about Series A rounds where the business is technically trading but still in early stage. I’m referring to businesses with a track record looking to develop/acquire/buy-out shareholders/have a need.

 This is where our investors are most active. If you have clients who seek capital that can’t be sourced from traditional banks and ABL’s, please get in touch.

As one of our clients is currently in legals for a £500k investment, I am compelled to write about another client who recently closed their doors and called in the Administrators.

This business failure is particularly sad for several reasons: it was a husband & wife owned company, grown from nothing to deliver a number of very successful years, suffered from several factors outside of their control which impacted on margins and the ability to make profits, but most of all it is sad because the failure of this business was completely avoidable.

We were approached over a year ago to help deliver new equity into the business. The reality of the situation was that investors were being asked to pay down supplier balances, deal with an HMRC Time To Pay arrangement totalling close to £1m and back a business not forecasting to make profits for another 2 years.  And yes, we can deliver investment solutions to situations like this, especially when the history has been so good, the balance sheet positive and top line sales holding up. But investors are business people and clearly would have wanted both a significant stake and level of influence on how the business was to be run. The owners weren’t able to get their heads around this and thus any equity solution fell away.

That old “which would you prefer” phrase – some shares in a larger successful business or 100% of nothing, comes to mind.

The final point to make here is a simple maths one: any Time to Pay arrangement agreed over one year, means you have to make that much net profit in said year, otherwise you will fail to make all payments, and keep up with current liabilities as & when they fall due. If you know you won’t make that level of profit, then you need an additional solution in the form of new money. Otherwise you will run out of cash some way through the period. Selling equity at this point may not be ideal – we all get that. But if it’s a choice of an equity partner or failure…..

Onwards and upwards…..

I was delighted to have a meeting with a senior MP and ex Govt Minister yesterday at Portculis House. It’s refreshing to be able to have a positive and open discussion, based on inward investment and regeneration schemes within the UK. My colleague and I are looking forward to helping bring parties together for the common good of UK plc. More on this in the weeks and months ahead.

This week we thought we would highlight the pressures of cashflow and solution when operating under constant cash constraints.

We are often asked to help companies who have a need for cash, and quickly. Much of the time the need centres around funding for business recovery or for opportunities and orders which cannot be processed due to cash constraints. Sometimes, businesses are simply running out of cash and need support.

For over 25 years now we have delivered solutions for business owners in these situations. We have a mature network of investors who are looking for good businesses to invest in. Private lenders who help here too without seeking equity are another option.

We understand that time is critical. Capital is often raised within that crucial window of four to six weeks. For those who have worked with us over the years, we are clear that we never overstep the boundaries of other professional service providers.

This piece has been prompted as a reminder that solutions do exist for businesses who are facing an uncertain future. There has been more news around insolvencies – regular insolvencies are on the up again this August, with a 19% increase since August 2022.

Our view is that a positive solution exists for most businesses in need of capital. The answer may not always be a straightforward investment of £x, but it will involve new money and freeing up of cash pressure.

References:

Sharp rise in company collapses in August | AccountingWEB

Ever the optimist, I am expecting confidence to return to our market in 2023. Basic economic stability and encouragement that key items such as inflation having now peaked, should encourage investors to come to the table again. 

There’s no doubt there’s a need for cash for those businesses struggling with the consequences of last year and beyond.  Cashflow pressures are not always resolved through increased borrowing, and additional shareholder investment is not always available. Increased trading is great but needs the cash input to fuel it.

Investors in the B&Y network like these situations. It gives them the chance to make a difference with their capital, in situations where the fundamentals of the business have been proven.

Whether your business is continuing to grow but needs further funding rounds to reach profit or has a history of profits, but these have been eaten up through the past few years, our message is clear; Beer & Young are here to help you find urgent/growth capital and find it quickly.

“Good Cashflow is the lifeblood of all SME’s. If your clients are experiencing cashflow problems, please get in touch.”

Case Study

It was identified that without new capital our client would have to start the insolvency process, which would have meant significant bad debt provision for the bank some of which would have fallen back to the directors via pg’s..

The business had Bank debt of £2.2m with a pressing HMRC debt of £750k, a negative balance sheet of £400k, and over a hundred jobs at risk.

This is what we and our client achieved:

• We generated interest from five well qualified and serious investors within 14 days of take-on
• Generated two offers of funding within 21 days
• £750k of new investment injected into the company within 40 working days
• All jobs were saved
• No bad debt, or call to directors pg’s
• Positive balance sheet of over £1 million after investment & write off of deferred consideration

We are delighted that the company has a much stronger financial platform from which to move forward.

“I would like to thank Beer & Young for all their professional efforts in securing the additional equity for our Company and for the contribution they made in saving the jobs of our employees.”

– SP, Managing Director

New Partnerships

Initiatives for 2023 include promoting professional colleagues with whom we have formed partnerships; most likely these will involve long standing business relationships we those companies and individuals with a superb track for delivery.

Today we’d like to introduce Graham Moorcraft at EFT Finance Ltd. EFT provide the best possible lending solutions to suit all SME’s.

Graham comments: “2023 will be a challenging time for all sectors of business with increased pressure of inflation and increased costs. With the withdrawal of Government support Covid schemes, even more than ever Companies will require the support of external lenders as High Street Banks become less supportive.

EFT is a long established FCA accredited Finance broker that provides all types of debt and have been working for many years with over 60 lenders to provide such arrangements to their clients and customers. They provide funding for all types of businesses and borrowing without limits.

Asset finance, Commercial or residential Mortgages (including bridging), Invoice discounting as well as refinancing of existing debt for better terms via ABL funding, are all areas of expertise on which we can deliver.”

Contact Graham Moorcraft on 07775 852 184

Email: gmoorcraft@eftfinance.co.uk

The Capital Finance International judging panel has announced Beer & Young as the 2022 award winner for Best SME Growth Capital Solutions UK. 

A massive thank you to our colleagues who work so hard to make this happen.

We are privileged to be recognised as a leader in the capital solution community and are proud to have an investor network that “bring the business know-how” as well as their funding.  

Read what they had to say below:

“Beer & Young (B&Y) has found its niche as a corporate finance boutique in the UK, where SMEs account for 99.9 percent of the business population. The firm is driven by a multidisciplinary team of entrepreneurs, accountants, bankers and investors dedicated to helping UK businesses fuel growth and overcome challenges. Founded in 1998, the firm connects entrepreneurs to a network of active investors and private equity funds looking for good business opportunities. The B&Y team can be reached round-clock by mobile phone and stays in close contact with clients and investors to create win-win solutions that match funding needs with capital providers. B&Y investors contribute more than just capital in a crunch; they bring the business know-how and contacts that can propel an SME to the next level. The firm targets SMEs with up to £50m in turnover and fewer than 100 employees. Funding ranges from £250,000 and £25m in equity or debt. Over the past eight years, B&Y has helped cash-constrained SMEs raise growth capital and urgent funding to the tune of £34m in equity and £43m in debt. B&Y has seen an uptick in business from quality companies struggling with cash pressures and working capital woes. It races to secure funding in turnaround situations when the timing is most critical, often raising capital within two to six weeks. The CFI.co judging panel announces Beer & Young as the 2022 award winner for Best SME Growth Capital Solutions (UK).”

We are delighted to have been shortlisted for the CFI.co award for Best SME Growth Capital Solutions 2022.
As a business that specialises in raising capital for SME’s, we are proud to have been recognised by our business community. Capital is the life blood for businesses whether in growth phase or as a business in need. We’ve been a market leader in the SME community for 24 years now, long may that continue.

Please don’t hesitate to contact us for a chat if you know of a business seeking capital, whatever the circumstances. We have an unmatched number of active investors looking for the right opportunities.

Private Investment fulfils the needs of stressed SME’s.​

There is a common theme to most of the enquiries we are receiving, in short it is a cash squeeze.

Whether the business is continuing to grow but needs further funding rounds to reach profit, or has a history of profits but these have been eaten up through the past two years, the bottom line is the same. “We need more cash to see us through.”

That’s fine until one considers the next question: “where from?”

A requirement for more capital does not turn your business from good to bad overnight. Business owners’ experiences through the past two and half years have been unprecedented, and not of their making. None of this solves the problem…. “Where do I find the money from?”

Bank support is somewhat of an oxymoron if you need more money. The Recovery Loan Scheme is not this at all. It’s a loan scheme for companies in growth who are not showing signs of stress or financial weakness. Underwriting teams across every funding sector are being more cautious, and it’s a fair bet to say this trend will continue for some time to come. For the business owner who’s numbers are not in great shape, it’s not surprising that lenders will be hesitant in offering additional support.

Thankfully, there is a solution that can work for most businesses and that is private capital, in the form equity funding. Private investors do back businesses where there is a proven business model and opportunity to make future profits. Often their capital comes with added skills and support, and this is to be welcomed. 

Beer & Young specialise in raising capital quickly for businesses which have a need for capital. Our network of private investors in this area 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 – below we have offered three recent examples of clients we have helped.

Beer & Young were approached to source urgent funding for a business that had reached a cash crunch whereby unless funding was received within three months, the business would be forced to close. Within one week of take-on we had sourced an overseas trade group who were very keen to enter into this market and looking for acquisitions and/or joint ventures. Within weeks a soft loan was accepted by our client to cover urgent working capital requirements. Further investment followed giving our client the money they need to develop their business and deliver growth & profits. 

Ladies Fashion, bespoke design. Below is an un-edited note we received from our client after investment had been received.

“My business has been developing well for some time, but due to unforeseen circumstances, I found myself needing urgent funding support. My bank wouldn’t support me so I turned to B&Y. Not only did they resolve my funding issues, they also helped me through the process and made it all simple. I am truly grateful for their efforts and recommend any business owner to contact them.”

Having failed to raise cash eighteen months prior, an owner approached B&Y seeking a cash injection to rationalise current operations and to de-leverage the balance sheet in order to drive future profitability and growth. We delivered four investor meetings with four weeks of engagement, two made offers of funding. One proposal clearly stood out and terms were agreed by all parties. The existing shareholders were bought out and £500,000 in new capital was invested in the business to deliver future growth. 

As the Autumn season is upon us, we want to give our colleagues a platform and some well-deserved focus. In the coming weeks we’ll offer some highlighted cases directly from B&Y Associates; please do reach out directly – building business relationships is a key element of what we do.

We were delighted to welcome Zack earlier in the Summer. Zack brings experience from working with a similar organisation to ours and amongst loads of other skills he brings the value of youth!

“Joining the B&Y family has delivered on every expectation I had. Working alongside Nick and his colleagues has provided me with the opportunity to support a wider variety of businesses. Having built my career around early-stage start-ups, I see the important role B&Y plays in supporting businesses during current market changes. More and more investors are looking to diversify and back more established businesses. This supports the existing economy and employment that have been affected by world crises such as the COVID pandemic and the war in Ukraine. During my short time with the team, two out of three assignments have reach investment offer stage and we hope will cross the line soon. It’s fascinating to work at different ends of the investment spectrum – growth and restructuring.

Both clients are food businesses – I like the sector but should be clear that I am more a generalist when it comes to investment solutions. I’m always around for a chat and look forward to hearing from you.”

Zack Louw, Associate.

Specialist Vegan Pet Care and Food

Our client is facing a critical moment in the expansion of current product lines and new customer acquisition. Investment will allow for greater marketing efforts as well as streamline operations to support growth. Our client is currently discussing offers including sweat equity for a key executive hire to support financial modelling and the overall investment campaign.

Leader in South & Southeast Asian Food Manufacturing

The pandemic saw many legacy businesses struggle and collapse as they tried to weather the economic storm. Our client was fortunate to have been able to weather the storm and now seeks to regain its place as the leader in its sector. We have successfully sourced the right private investors that will help shape the way forward with new retail partners and internal restructuring.