The Bishop comments on 'Exports driving the East Midlands Economy'.

Exports in the East Midlands rose by more than 20% in 2017 according to the latest figures published by HMRC. The national picture revealed that exports from England rose by 11.6% to £244 billion but the East Midlands was one of the bright spots in the UK outstripping the national average.

The East Midlands is home to over 10,000 exporters and the figures show an encouraging dynamism in our local economy with our regional companies taking advantage of the fall in sterling following Brexit. Our Trade Secretary Dr Liam Fox commented that “the UK is entering a period of unprecedented economic opportunity and the surge in exports adds up to a positive picture for the British economy”.

This is certainly good news for the East Midlands and flies in the face of some of the gloomy economic forecasts we have received from the Bank of England. When asked about the figures the Bishop commented - “I expect UK growth to remain modest at 1.5% in 2018 but I am confident that the East Midlands will show higher growth as it picks up the mantle from the South East and continues to benefit from the competitive value of the pound against the euro. With Jeremy Corbyn and his fellow comrade John McDonnell looming in the background we are seeing high levels of M&A activity with baby boomers choosing to bring their exit plans forward rather than risk a socialist government”.

It pays to have a corporate finance advisor on your side

Business owners are frequently approached by trade buyers looking to expand their groups and many owners try and negotiate deals without using a corporate finance advisor.  The trade buyer has probably bought many businesses before and they know they know all the tricks in the book whilst the owner manager is probably selling their business for the first time. Well that’s the time to pick the phone up to a corporate finance advisor, someone who does M&A for a living.  Trust me it pays to have a corporate finance advisor in your corner.

Private equity houses buy and sell businesses for a living, yet they always use the service of an experienced corporate finance advisor. Here’s why:-

  • There is potential that the advisor may be able to increase the price by introducing other potential buyers and create some competitive tension.
  • Selling a business is very time consuming – the owner needs to concentrate on running their business.
  • Providing the right information in the right way (“the spin”) is key to a successful sale.
  • Corporate finance advisors are skilled negotiators – they know when to push and when to pull.
  • Corporate finance advisors can play the hardmen when the going gets tough, allowing principals to remain on good terms.
  • Appointing a corporate finance advisor enhances the professionalism. It keeps the buyers on their toes and the project on time.
  • Corporate financiers see deal breakers coming and have the experience on how to deal with them.
  • Corporate financiers are cost effective – they are success led and will charge the majority of their fee on completion of the project.

 

The Business Growth Fund is becoming the new 3i

Those of you old enough to remember the old 3i ("Investors in Industry") will recognise the rise of the Business Growth Fund ("BGF") and see a remarkable similarity. This should not surprise you given the number of 3i alumni who have now ended up at BGF offices.

BGF led the way in 2017 and invested more than £300m in almost 50 companies last year completing 48 new investments. The £79m invested in December was also an all-time record month for the investor.

Notable exits in 2017 included Statesman Travel, BGF's second ever investment, made in October 2011 and Bullitt Group, which sold a majority stake to private equity firm Exponent who were advised by the Bishopsgate team in Stamford. BGF have certainly kept the corporate finance market busy and it means that growth businesses have ready access to capital.

Stephen Welton, chief executive of BGF, said: "The macro-economic and political landscape remains uncertain and the current environment is not easy for any business to navigate. But more and more business owners are recognising that with strong financial backing and genuine support there are as many opportunities as challenges, and that growth is out there."

The Bishop remembers the Chairman of 3i saying something similar back in the 1980s before they changed their strategy and divested 90% of their portfolio. We will watch BGF's growth with interest.