PREPARINGYOU TO SELL

M&A NEWS FROM BCMS CORPORATE SUMMER 2009M&A NEWS FROM BCMS CORPORATE SUMMER 2009

INSIDE: FREE SERVICES DEAL COMPLETIONS PREPARING YOU TO SELL CHINA DEVELOPMENTS M&A SECTOR EXPERIENCEINVESTORS IN PEOPLE N-XDs M&A TERMINOLOGY INTERNATIONAL NEWS PHILANTHROPY SUCCESS GALLERY

i D E A LA c h i e v i n g y o u r i d e a l e x i t

www.bcmscorporate.com

Why personalpreparation canbe essential to asuccessful company sale

FREE SEMINARS

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During our free, morning seminars we reveal how our approach to selling companies works and why this, asopposed to the traditional methods, leads to a maximised sale price.

A step-by-step guide takes attendees through our sale process, from preparing a company for sale, contactingpotential acquirers and receiving offers through to price negotiation and sale completion. A fascinatingcollection of case studies provide many invaluable lessons.

In addition, this seminar covers the four key issues which must be addressed if a maximised sale price is to beachieved.

Our process achieves maximum offers which are, on average, 2.5 times higher than the initial offer received for acompany. This difference typically equates to the generation of hundreds of thousands or millions of poundsmore for business owners.

If you would like to book onto one of the seminars below, which attracted nearly 2,200 business owners lastyear alone, please visit www.bcmscorporate.com or call 01635 296191. Our website also lists further seminardates and locations in 2009.

Next seminar dates

Tues 4th Aug Salisbury Salisbury Racecourse

Tues 11th Aug Cambridge The Belfry

Tues 18th Aug Edinburgh The Academy Holiday Inn

Wed 2nd Sept Huddersfield Bagdon Hall

Tues 8th Sept Nottingham The Belfry

Tues 15th Sept Maidenhead Fredrick’s Hotel

Tues 22nd Sept Exeter Woodbury Park

Tues 29th Sept Dudley Copthorne Merry Hill

Free and confidential business evaluation meetings

If you would like to discuss the sale of your company in more detail we offer free businessevaluation meetings at which you can discuss your exit plans and find out more about usand how we can assist you in achieving a maximised sale price. To arrange a businessevaluation meeting please call 01635 296191.

Video interviews of past clients

Is our service really as good as we claim? Find out what six business owners, who used our refreshingly differentapproach to sell their companies, thought of our process at www.bcmscorporate.com. Questions covering allaspects of our service, from the initial stages right through to completion, ensure compelling viewing.

What exactly is our refreshingly different approach to the sale process ofprivately owned companies and what makes it so successful at maximisingsale prices?

In this issue of i D E A LDeal completions page 4

A selection of just some of the deals BCMS Corporate has

completed in the last quarter

Preparing you to sell page 6

Preparing a business for sale is a recognised requirement

but should business owners prepare themselves too?

A creative approach in China page 8

Expansion into China with the establishment of new links

into the creative industry

Your questions answered page 10

Is specialist M&A help really necessary for your industry?

Invest in success page 11

Our perspective on developing human resources

and the IiP standard

Non-executive directorsand private companies page 12

Shuna Stirling from Brodies LLP on the role of N-XDs

in privately owned companies

Terminology explained page 13

What is a ‘Heads of Terms’ document?

International news page 14

BCMS Corporate opens a new office in Canada

Philanthropy page 15

Charitable work by BCMS Corporate staff

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The nature of our business gives us veryprecise information on current businessactivity in the UK, amongst both SME’sand larger corporates. I have to say thatour observations are often at variancewith the so-called “official statistics.”The trouble with statistics is thatanybody can put any slant on them which suits theirargument! I suppose that is why a cynic once said, “There arelies, damn lies and statistics – in that order!”

BCMS Corporate is privileged to be in the front line when itcomes to observing the amount of business activity in the UK,with hundreds of companies and business organizationsfeeding us real up-to-the-minute sales and production data, aswell as forecasts of expected order levels. Every month wespeak with hundreds of M.D’s who tell us what is happening intheir market sector, how they are affected by the globaleconomy and what they see happening in the future. Just asimportant, we speak to hundreds of potential acquirers to gettheir perspective on current and future buying intentions.

Here in the UK we have observed that over the last threemonths there has been a welcome resurgence of activity in theM&A market. For example, last month we located nearly 500potential purchasers who expressed an interest in purchasingour client companies and who were willing to sign NDA’s toprogress discussions. This compares favourably to theinterest we achieved early in 2008, before the financial crisistook hold. As further proof of acquirers serious buyingintentions, we recorded as many accepted offers in June 2009as we did in June 2008.

Sometimes purchasers have difficulty in financing anacquisition, so we have set in place a panel of fundingcompanies who may be able to assist a purchaser if he wishesto borrow £2 million - £20 million, or even more.

For any owner who is contemplating selling his/her business,it may be appropriate to think of selling sooner than later.First, as I mentioned, there are still plenty of interested buyersout there despite all the doom and gloom you read about inthe Press, and second, it may be wise to take action before theproposed new taxes hit both high earners and all businessesin the next financial year.

In the meantime, I hope you find iDeal magazine stimulatingand helpful”.

Brian Rebbettes - Chairman

“I trust you will enjoy the articles in

our Summer issue of iDEAL.

iDEAL is published quarterly by BCMS Corporate, Kingsclere Park, Kingsclere, Newbury, Berkshire, RG20 4SW, UK and is copyright protected. Reproduction in whole or part without written permission is strictly prohibited.

While every care has been taken during the preparation of this magazine, BCMS Corporate cannot be held responsible for the accuracy of the information herein or for any consequence arising from it. BCMS Corporateaccepts no responsibility for the views expressed by contributors. Opinions expressed do not necessarily reflect BCMS Corporate policies. The articles in this magazine are intended to be for general information only andshould not be used as the basis for divestment decisions. BCMS Corporate, its staff and contributors do not accept any liability for any loss suffered by readers as a result of decisions made purely on the basis of thecontents of this publication.

Professional advice should be taken in relation to all divestment decisions. BCMS Corporate is a trading style of BCMS Corporate Limited.

i D E A L

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The Finnish Empower Group, with 3,000 employees, hasacquired all shares in the Swedish Scancon Group, with 3companies and 250 employees, specialising in mechanicalmaintenance supplies.

BCMS Co r p o r a t e • D e a l c o m p l e t i o n s

Bars Berglund, from BCMSCorporate’s Scandinavian office,

managed the project, assisted by hiscolleague Göran Porse. Due to thecomplexity of the Scancon Group andthe impact of the present worldfinancial situation on some potentialbuyers, the process time was moreprolonged than usual. From beingawarded the sales mandate tocompletion took close to 24 monthsbut nevertheless, the completion ofthis deal and many others over thelast three months confirms thatbuyers are active and goodcompanies, when taken to market viathe comprehensive and highly

UCA specialise in reducing the costof electricity, gas and water for

industrial, commercial and publicsector organisations in the UK.Headed up by Ashok Sharma, thecompany, which has offices inMaidstone and Stockport, approachedBCMS Corporate on therecommendation of its accountant tosearch for a suitable buyer to helptake the business forward.BCMS Corporate were brought in byUCA to oversee the sale of thebusiness (which has helped over 350clients save money on their utility

Empower expands itsSwedish operations toindustrial maintenance

Utility Cost Analysis sold tofellow energy consultants M&C

bills to date), safeguarding staff jobsin the process. The new owners of thecompany, M&C, are one of the world’sbest known energy consultants with anetwork of offices throughout the UK,Europe, Asia and the US.Says Ashok Sharma, ManagingDirector of UCA: “We’re delighted tohave completed the sale to M&C withthe help of BCMS Corporate and lookforward to working together to takethe business forward.”Adds Steve Marston, Deal Leader atBCMS Corporate: “This is a primeexample of how our aim of targeting

strategically motivated potentialacquirers, after exhaustive researchand qualification, can pay off for bothcompanies. There were naturalsynergies between the two companiesbecause they both work in the energyconsultancy sector, they hadcomplementary client bases and therewas a strong will to do the deal onboth sides from an early stage innegotiations. I am confident that UCAand its clients will benefit hugelyfrom now being part of the successfulM&C brand.”

effective BCMS Corporate process, arestill very attractive. In fact, as normalfor a BCMS Corporate assisted sale,the final sale price achieved forScancon was more than double thefirst bid received.“We wanted to strengthen Scancon’sposition in Sweden, Finland andNorway. The now contracted mergerinto Empower Group was regarded asthe best option to implement thisgrowth strategy. By this change wealso extend Scancon’s expertise toservices for pulp and paper industrysegments”, said Bengt Öhrblad andGunnar Spolander, the mainshareholders of Scancon Group.

BCMS Corporate has completed the sale of Utility Cost Analysis(UCA) to fellow energy consultants McKinnon & Clarke (M&C).

“Empower’s aim is to build a strongfoothold in the Nordic Countries andthe Baltic Sea region in the energy,telecom and industry sectors. Theacquisition of Scancon is a logical stepin our expansion strategy. Theacquisition will provide us with asolid growth platform for expandingour services in the industry sector.The Scancon acquisition willcomplement our existing competencein Finland”, says Aappo Kontu, thepresident of Empower Group.Both Scancon and Empower have en-thusiastically expressed their fullsatisfaction with the work done.

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BCMS Co r p o r a t e • D e a l c o m p l e t i o n s

Deal summaryGB Seeds

Potential acquirers identified 276

Non-disclosure agreements signed 2*

Qualified acquirer shortlist 1

1st and revised offers 1

Deal duration (months) 11

* Only 3 potential acquirers contacted at clientrequest

Utility Cost Analysis

Potential acquirers identified 191

Non-disclosure agreements signed 38

Qualified acquirer shortlist 8

1st and revised offers 2

Deal duration (months) 10

Deal summary key

Potential acquirers identified: the number of prospects

identified by our in-house team of researchers through

their initial desk research.

Non-disclosure agreements (NDA) signed: the number

of NDA’s represents the number of potential acquirers

which have indicated an interest in our client’s business

by requesting further information. Before this is given

an ‘NDA’ is signed by them.

Qualified shortlist: the result of an exhaustive process

undertaken by our project managers to ensure the most

suitable potential acquirers are taken through to the

latter stages of the deal.

1st and revised offers: the result of our work to ensure

the post-deal benefits of the acquisition are clearly

understood by the acquirers.

Live to market: the point at which our specialist

Prospect Generation Team start to speak to potential

acquirers about an opportunity to acquire a client

company.

GB Seeds, which is based inIngham, near Bury St

Edmunds, is one of the country’sbest-known independent seedwholesalers. Founded in 2000,following a buy-out from the long-established seed business ofGeorge Burlingham and Sons, thedirectors of the company, led byManaging Director, RichardMason, had been looking for asuitable buyer for the business.BCMS Corporate was brought inby GB Seeds during the secondhalf of last year to oversee the saleof the £15m turnover business.The new owners of GB Seeds,Masstock Arable, are a leadingR&D-led supplier of agronomyadvice, input products and farmconsultancy services based inCheltenham.The sale of GB Seeds is one ofmany deals completed by BCMS

BCMS Corporateplants the perfect deal for

GB SeedsGB Seeds has been acquired by Masstock Arable

in a multi-million pound deal.

Corporate since the turn of theyear, and based on currentactivity, 2009 looks like beinganother highly successful year.Says David Cribbin, ManagingDirector of Masstock Arable: “Theaddition of the GB Seeds businessstrengthens Masstock’s existingseed offer which we view asstrategically important for thefuture. GB Seeds bringcomplementary seed processingexpertise and as such offers us theopportunity to diversify into newmarkets.”Adds Sunita Meigh, Deal Leaderat BCMS Corporate: “We arethrilled to have successfullycompleted the sale on behalf ofthe directors of GB Seeds and areconfident that everyone within thecompany will benefit hugely frombeing part of Masstock Arablemoving forward.

Selling your business is likely to be a once-only experience, so how do you prepare for something which

you have no experience of? Preparation of your business and how to document its strengths is clearly

advisable but, often overlooked, is an important element of preparation – preparing you, the owner, for

the process. Ask any acquirer what is most important to them in making investment decisions –

invariably the ‘people’ factor will be number one or two on their list. Soft issues – chemistry, rapport,

culture, call them what you will, are key elements of selling a business.

BCMS Co r p o r a t e • P r e p a r i n g y o u t o s e l l

Iam sure like me, in certaincircumstances, things which you

would ordinarily ‘take in your stride’,suddenly become so much moredifficult. This can happen, inparticular, when you are out of your‘comfort zone’ and the implicationsare so much more important than justday-to-day events. Everyone has theirown ways of dealing with thesesituations, some more effective thanothers. What all techniques fall backon though is preparation andpractice. Literally thousands of bookshave been written on the subject ofperforming well in stressful orunfamiliar business situations andthere is no shortage of consultantsand business coaches who will professto provide solutions.When it comes to selling yourbusiness, generic self-help books,general business or presentationcoaching can have limited impact.Few business authors or coaches haveexperienced what you will experiencewhen you sell your business. Very fewwill have been in the situation wherethe success or otherwise of selling,what for most business owners is their‘most valuable asset’, is at stake. This

is not to dismiss these methods ofpreparing for ‘out of your comfortzone’ events, some undoubtedly havemerit, but shortcomings in thisinstance are simply a product of therelative rarity of experience tounderpin the advice. Most peoplenever sell a business and those thatdo, rarely repeat the process, so mostof the available help is not specificand relies on third-hand knowledgeand possibly, a good deal of guess-work and assumption.Clients frequently tell us that themost daunting aspect of selling theirbusiness is meeting and presenting topotential acquirers. Many acquirersare ‘old hands’ at negotiating withvendors and very aware of theexperience deficit on the part of theseller in these situations.So what’s theanswer toaddressing theknowledge andexperiencedeficit? Youcan letsomeone elsedo the talking, perhaps youraccountant (not renowned for their

appreciation or mastery of softissues), but the best qualified person,at least in terms of knowledge is you,the owner, and given the rightcoaching, founded on our experienceof thousands of business salenegotiation meetings, this has to bethe right option.BCMS Corporate was established byentrepreneurs who have experiencedselling their own businesespreviously. All the emotions, stressesand frustrations which occur whenselling a business, the Directors haveexperienced first-hand. This soberingexperience was the seed of the idea toinclude vendor ‘coaching’ as part ofwhat we do today for our clients. Toget clients ready for face-to-facemeetings with potential acquirersthey all go through a ‘Dry-run’meeting. This meeting, as its namesuggests, includes a run-through andrehearsal, where mistakes have nofinancial or negotation consequences,in preparation for the entire life-cycleof the sale and crucially those face-to-face meetings with acquirers. We ‘liftthe lid’ on the tactics acquirers arelikely to adopt, give guidance oncountering them, prepare you for all

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Preparingyou to sell

BCMS Co r p o r a t e • P r e p a r i n g y o u t o s e l l

the questions which will inevitablycrop up and coach you how best topresent the benefits of the proposedacquisition.In most cases our clients have, atsome point in the history of theirbusiness, experienced more genericcoaching or consulting. It is fair tosay that many come to thesemeetings with a healthy degree ofscepticism but leave with confidenceabout the process and mostimportantly, how to handle thosesituations where the stakes arehighest and the stress levels peak.These vitally important ‘Dry-runs’are delivered by our Deal Leaderswho work with our clientsthroughout the term of the businesssale. In addition to these ‘coaching’sessions our Deal Leaders host

meetings between our clients andthe potential acquirers. The ‘Dry-run’ is part of a process designed toensure that we move, in stages,successfully towards the intendedgoal.At risk of being accused of goingoff at a tangent, there is an anecdotewhich acts as a perfect metaphor.Dave Rebbettes, a founding directorof BCMS Corporate, is a keenyachtsman. Even on a relativelyshort trip, he tells me that a degreeor two out in terms of plotting acourse can result in missing theintended destination by 50 miles ormore. Time spent preparing,checking and re-checking is vital toensuring you get where you want togo. Seemingly small details can havea profound effect on the end result.

I think it’s fair to say there isslightly greater margin for errorwhen selling a business butinterestingly, in 30% of transactionsBCMS Corporate completes , after acomprehensive identification,introduction and qualificationprocess, the first acquirer that comesto the negotiating table buys thebusiness. The keenest potentialaquirers with the strongest motiveswill, if possible, want to assess theopportunity early on – this firstmeeting cannot be used as a trialrun, preparation must bemeticulous.Sticking with the nautical theme,what we aim to do is prevent youarriving in Marseilles when you areheading for Cannes!

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BCMS Co r p o r a t e • Ch i n a

A creative approach in ChinaSince writing the Spring issue of iDeal members of the BCMS Corporate management team have onceagain been in China to progress opportunities. As outlined in last issue’s article ‘Look East’, we are verybullish about China and are driven by two primary objectives: To replicate what we do in the UK forbusiness owners in China and to provide BCMS Corporate clients in the UK and elsewhere with a distinctadvantage if the most suitable buyer happens to be a Chinese company.

BCMS Corporate has now signed co-operation agreements with,

amongst others, the China GuanghuaFoundation (GHF) and the DragonDesign Fund of China GuanghuaFoundation (DDF) which work withenvironmental and design-basedindustries in China. What has becomevery apparent on our trips to China isthat there has been a marked shift infocus from an agricultural,manufacturing and export economytowards a more innovative, hi-techeconomy. At present rate of growth,benchmarked by patent registrations,China will become the World’s mostinnovative nation by 2012.*We met with five prospective clientcompanies on our last trip, four ofwhich are in the environmental andcreative sectors and all hadsignificant IPR and patentedtechnologies, are enjoying very rapidrevenue and profit growth in thehome market and all have globalpotential. We also met with a numberof Chinese companies actively seekinginvestment opportunities outside

China and we will be bringing thesecompanies into the bidding processwhere appropriate.Below are extracts from an articlepublished in ‘Beijing Business Today’based on an interview with SteveRebbettes, BCMS operations director,about our co-operation with DDF.Chinese creative industry is a "richseam" for British entrepreneurs"Foreign media reporting aboutChina can often be negative, acommon theme is that China'screative industries are 'pirated' orroutinely copy from other countries.In my first visit to China last year, Ifound that China's creative industry isvery advanced, it is a 'rich seam' inmy eyes,” says Steve Rebbettes.The Chinese creative industry maybe one of the best kept secrets in theWorld. To date, China’s reputationhas predominantly been as a sourceof cheap labour. "Made in China" is astamp often seen on goods producedfor Western markets, not least ofwhich, is the very high percentage ofgoods for the US and UK consumer.The very significant shift to a more

innovative and hi-tech economythat has been taking place

over the last decade inChina though, hasgone largelyunreported inthe West.

"From this fact-finding visit and theinformation gathered we now have amuch better understanding of theChinese creative industry. We willpublicise this understanding in theWest. Through the co-operation withDDF, we have gained a deeperappreciation of China's creativeindustries and seen for ourselves thatoriginal design, research anddevelopment activity is very stronghere" said Steve.Co-operation with DDF - first timeinto Chinese creative industryAs a UK M&A specialist, BCMSCorporate’s core business hastraditionally operated in Europe;China is its first venture into Asia andits co-operation with DDF is animportant part of its work in theChinese creative industry. "BCMSaims to provide M&A services to theChinese creative industry – the mainreason we have chosen to work withDDF is that through its own work, ithas attracted the best creative talentsin China. BCMS Corporate hope toprovide a platform for these greatcreative talents to open up betterprospects for growth – at the sametime, deploy its professional M&Aservices, to meet the precise needs ofSMEs in attracting investors andprovide a further boost to growth athome and in overseas markets."To this end, BCMS and DDF havesigned a co-operation agreement toprovide a service to Chinesecompanies enabling them to assess,and then, where appropriate, accessinternational financial & investmentopportunities."At present we are looking for goodopportunities, the DDF ‘Dalian DesignFestival’ is a good opportunity for usto reach more businesses with a viewto providing support and advice inkey areas including financing,opening up overseas markets, equitytransfer, as well as inbound andoutbound M&A." BCMS’s Directorsaid.

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BCMS will offer support in theDalian Design Festival, including freeseminars and lectures toentrepreneurs – a large number ofentrepreneurs do not have experiencein M&A, such help from BCMS isinvaluable.The Focus on creative industry“BCMS provides services toenterprises in all industries in theUnited Kingdom and other countries,including the creative industry. Forexample, we recently sold anadvertising company specialising inadvertising in Railway Stations acrossthe UK; by using us, they achievedmaximum value, a price significantlyabove the owners expectations,”explained Steve.In addition to the creativeindustry, BCMS is planning towork in sectors such as energy,brands, hi-tech, environmentaland other hot sectors in China,"We will make use of ourprofessional experience andknowledge to provide the bestservice. In the initial stage wewill proceed carefully withour China businessdevelopment plan, adaptingto Chinese culture, so thatour service accuratelyreflects needs andexpectations, making for amore conducive, smoothdevelopment and follow-up.

B CMS Co r p o r a t e • Ch i n a

" BCMS’s director said. "We hope thatby adjusting our services we candeliver a perfect service to Chinesecreative and other industries. We willbe undertaking a limited number ofprojects, and gradually adjust ourmodel of operation in order toeventually adapt to the Chinesemarket," he continued.Talent finding is the core strategy“In the creative industry, there aremany exceptional companies in Chinaacross all sectors, the need tounderstand Chinese culture in the

context of design will becomeincreasingly important for manyWestern companies. Chinese designtalent will be, we believe, muchsought after,” says Steve Rebbettes.Based on an interview and originalarticle which appeared in BeijingBusiness Today by Reporter Nili Liu,18th May 2009For more information on BCMSCorporate and China contact AndyHunt, Strategy Development Manageror, Steve Anstey, InternationalBusiness Development Manager on01635 296191.*Souce: Thomson Reuters report,Patented in China, by Eve Y. Zhou,PH.D., and Bob Stembridge.

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A: This is a common enoughquestion asked of our Business

Managers, the people here at BCMSCorporate who meet prospectiveclients for the first time and presentthe BCMS Corporate case for beingawarded a sales mandate.There are three key considerationswhich we believe are more importantthan sector expertise and relevant tothis question. Before I tackle thesethough, let me just say that BCMSCorporate has sold companies, onbehalf of its clients, in almost everysector. We are well equipped toprovide case studies but this, in ourview, can provide a false sense ofsecurity when choosing who to place a sales mandatewith. The decision must be based on more.It is not uncommon for corporate finance boutiques,other business agents or even investment banks to stresstheir sector-specific capabilities, something which BCMSCorporate deliberately chooses not to do. Those of youwho have been to one of our weekly seminars or haveread our book will know that we frequently disagree withtraditional thinking when it comes to selling businesses.So why do we differ on the issue of the importance ofindustry sector experience and what are the three keyconsiderations?

Avoid assumptionsA sector specialist will often tell you that they know whothe buyers are. This can limit an open-minded view aboutwho the best buyers might be and prevents the widestpossible marketing of a business to find the obvious and,less obvious buyers. At BCMS Corporate we do not wantour staff to view each project through the prism of asector specialism and deliberately, or sub-consciously,discount from consideration those potential acquirerswhich don’t happen to fit a too narrow prescribed view.Every project we undertake is guided by a marketingstrategy, developed by our research team in conjunction

Your questions answeredIneach edition of iDEAL a senior member of our management teamwill address oneof a number of common questions we are asked by business owners. In this editionDavid Rebbettes, Director at BCMS Corporate reveals why experience in a particularmarket sector is not essential.

with our clients, it is designed not tofunnel research in the early stages,but to open it up in order to maximisethe prospect of finding the right buyer– obvious or not.

A structured approachWe deploy a highly structuredapproach to selling businesses; whathas structure can be measured andrepeated, to deliver consistent qualityand results. Structure however shouldnot be confused with limiting theexercise of good judgement, thestructured approach frees our staff toexercise their judgement but gives the

clients a basis on which to measure what we are deliveringover time, against what has been promised. Progress ismeasured, feedback is frequent and tactics can be fine-tuned if required, in a timely way.

Global reachWe now have operations in North America, China,Scandinavia, Eastern Europe and Latin America. Theseoperations are not the result of a loose network of affiliatedcompanies but actual BCMS operations deploying the samestructured approach, staff either seconded from the UK ortrained here in the UK and crucially, for our ‘salesmandate’ clients, providing an extension of our ability tolook not just in a companies home market, but alsooverseas for the right buyer. This is something we believewill be important in the next few years as companies indeveloping markets increasingly look outwards.

I mentioned our seminars above, to view dates andvenues and to book a seat please go to our website.Alternatively you can subscribe to ‘iDeal’ or request a copyof our book online. You may prefer, if considering a sale,to book a confidential business evaluation meeting with aBCMS Corporate Business Manager, if so phone01635 296191.

Q: Have you sold a business in the same sector as mine? If not, why should I use BCMSCorporate to sell my company?

B CMS Co r p o r a t e • Y o u r q u e s t i o n s a n s w e r e d

Picking up on a point made byBrian Rebbettes, BCMS Corporate

Chairman, in his foreword to thisissue of iDEAL, he observes that BCMSCorporate is in a privileged positionto receive first-hand insight into whatis happening in the real world ofbusiness - behind the headlines.

Distinct cultureAlthough not specifically referred toby him in his foreword, there isanother insight which also reveals agreat deal about private businesses,one which we see in our clients’businesses on a daily basis. Smallerand medium-sized private businessestend to have a distinct culture,particularly in the relationship whichexists between company owners andtheir staff. This is almost always afactor when an owner decides to sell;there is concern that whatever deal isdone it is right for the departingowner and the employees which willremain with the business after itpasses into new hands. In many cases,employees have been with the samebusiness from its exciting and lesspredictable start-up stage, have beenabsolutely integral to growth andremain keys to its continueddevelopment. Many company ownerswe meet have invested significanttime and money to ensure that thosepeople have the skills to take on thechallenge of new, more demandingand more responsible roles as thebusiness grows, leaving a new ownerwith a solid legacy of well motivated,dependable and very capable people.

Invest for successArguably, an acquirer views a target company’s human resourcesas its most important asset. Why? Because business goals aremuch easier to attain when they are aligned with the capability ofhuman resources. How best to do this is open to debate butInvestors in People (IiP) has certainly been good for us. No matterhow you choose to approach it ‘investing in people’ is central tosuccessful, sustainable businesses.

BCMS Co r p o r a t e • I n v e s t o r s i n P e o p l e

Test of timeThere are many ways in whichowners have chosen to invest in theirstaff, not least of which is theInvestors in People standard which,unlike many government inspiredinitiatives, has stood the test of time.The reason for this was very aptlysummed up by MP Michael Howard in1991 when the scheme was launched.He said “Investors in People is astandard designed by business, whichwill be met by business, because it isin the interests of business. This iswhy it will survive.”The CBI, the so-called ‘employersorganisation’, came up with theoriginal idea for IiP and no doubt, asMichael Howard recognised, itsorigins were based on a genuineunderstanding of business needs.Perhaps another reason though for itssurvival is the lack of politicalinterference by successivegovernments and therefore it iscontinuity that has allowed it tobecome established as a benchmarkwhich 35,000 companies now view asa cornerstone to planning in thecontext of developing humanresources. When applied as intended,it produces in effect, a [humanresource] business plan within theoverall business plan.

Embracing IipLike some of our clients, BCMSCorporate has embraced the IiPstandard and it is viewed by themanagement and staff as a valuable

tool. Having just undergone thelatest three-year assessment theprocess has highlighted what wedo well – thankfully theoverwhelming majority – andwhat we need to improve on.Most importantly it allows forcompletely honest feedback fromstaff about their actual, and notthe management’s perceivedexperience of working for BCMSCorporate. It also provides aframework for further investmentin and development of staff, tokeep pace with the humanresource challenges that theoverall corporate goals willdetermine.IiP has played an important partin the successful and rapidexpansion of BCMS Corporate inrecent years. Some members ofstaff, who have developed theircareers with the company arenow based either on secondment,or have relocated to othercountries to pioneer the growthof the business. As a means to anend, it has certainly worked forus and our staff.Whatever the challengescompanies face, whethernavigating a path through thecurrent economic circumstances,expansion or disposal, in ourexperience and that of many ofour clients, investing in peoplehas been absolutely central tosuccess.

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The non-executive director (N-XD) has been a feature of the quoted company landscape formany years now, but how relevant are N-XDs to private companies?

BCMS Co r p o r a t e • N o n e x e c u t i v e d i r e c t o r s

The role of the N-XD is enshrinedin the Combined Code on

Corporate Governance (Code) whichprovides that companies to which theCode applies should have a balance ofexecutives and non-executives suchthat no one individual or small groupof individuals can dominate theboard’s decision making. Althoughfalling outside the scope of the Code,appointing a non-executive directorto a UK private company may also beappropriate and bring with it manybenefits, which is the subject of arecently published paper from theInstitute of Chartered Accountants ofScotland (ICAS).“In the case of a private business,the appointment of a non-executivedirector is ultimately a judgement callfor the executive directors,” explainedShuna Stirling, a corporate lawyer atBrodies LLP, a leading Scottish lawfirm. “Whether or not this isappropriate will depend on a numberof factors including the size of thecompany, the nature of its business,the stage of its development, its

future strategy, and the currentcomposition of its board. Clearly theprocess of choosing the rightcandidate is crucial; they must possessa demonstrable capability in thoseareas where the board seeks tosupplement its skills. An aspiring non-executive director will also need tosatisfy themselves that they havesufficient understanding of thepotential risks, how the companyoperates and how it deals withbusiness risk,” she added.The ICAS guidance is intended tohelp identify whether a privatecompany would benefit from

appointing non-executive directorsand also outlines a number ofpractical measures to help both thecompany and the directors fulfil theirroles and manage their riskseffectively.

BCMS Corporate appointsnon-executive directorBCMS Corporate has recentlyundertaken just such a strategy inappointing Paul Davis to its board asa non-executive director. Davis, whohas already had a successfulcorporate career – both as a divisionaldirector with Rank Hovis McDougalland within the giant BOC Group – willprovide a wealth of industryknowledge as well as an independentvoice to the Company.Steve Rebbettes, Operations Directorat BCMS Corporate explained, “I haveknown and worked with Paul formany years now and am delightedthat he has decided to cement hisrelationship with us by joining theboard of directors. As a family-run

Non-executive directors andprivate companies

Shuna Stirling, corporate lawyer at Brodies LLP

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BCMS Co r p o r a t e • N o n e x e c u t i v e d i r e c t o r s

Once an offer for a business has been accepted bythe vendor a ‘Heads of Terms’ document is

produced. This legally non-binding document, signedby both the vendor and potential acquirer, outlinesthe key areas of agreement between both parties.Although some variations may occur, the ‘Heads ofTerms’ document typically includes a description ofthe business to be sold, principal conditions of theoffer, the sale price, terms of payment, the nature ofany vendor indemnities/warranties, due diligencepartner information and an overall timetable forcompletion.A key benefit of the ‘Heads of Terms’ agreement isthat any significant issues which may have beenoverlooked in the preceding price negotiation processwill be highlighted and can be resolved before movingforward with costly due diligence and other legalwork.Although the main ‘Heads of Terms’ document islegally non-binding it may contain two elements whichwill be legally binding. The first of these is anexclusivity agreement which prevents the vendor fromcontinuing discussions with other potential acquirersfor a specific time period. This is a key benefit to thepotential acquirer who can then undertake the cost ofdue diligence without the fear of later losing theacquisition to another potential acquirer. Secondly, aconfidentiality agreement, if not already in place, mayform part of the ‘Heads of Terms’ document.Although this document is primarily known as the‘Heads of Terms’ document it may also be known as a‘Memorandum of Understanding’ or ‘Letter of Intent’.

What is a ‘Heads of Terms’ document?

BCMS Co r p o r a t e • T e r m i n o l o g y e x p l a i n e d

enterprise, it’s important for us tomaintain an open mind and balancedview, particularly when it comes tothe strategic development of thebusiness. Paul provides exactly theright degree of independent,professional expertise to keep usfocussed and drive the businessforward.”Now employing more than 140 staff,BCMS Corporate has undergoneunprecedented growth in the last 4years establishing offices in NorthAmerica, mainland Europe and Asia.

“BCMS Corporate has always basedits approach on being a familybusiness that’s professionally run,”adds Davis. “It’s a winning formulaand BCMS Corporate is growingquickly, so my role will be to bringadded value to this approach byproviding an important externalperspective when it comes to runninga larger business and developing astrategic approach to future growth.”

Paul Davis, BCMS Corporate non executive director

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ScandinaviaAnews highlight from Scandinavia

was the sale of Sweden’s ScanconGroup, comprising three companiesand 250 employees, to the FinnishEmpower Group. This deal, slightlyhampered by the current Worldeconomic climate, still attracted anexcellent range of offers and sold fora very attractive price – the highestand successful offer for the businesswas 200% more than the lowest offerreceived. For more details, pleaseturn to page 4.

BCMS Corporate success in North America,Canada, Eastern Europe and Scandinavia.

BCMS Co r p o r a t e • I n t e r n a t i o n a l

Internationalnews

North America…and Canada!Wecontinue to extend our reach

inside and outside of NorthAmerica. Dave Rebbettes, one of thecompany’s founding directors,delivered two seminars in theCanadian cities of Edmonton andCalgary which produced such largeaudiences that a new office has beenopened in Calgary, specifically tomanage the resulting influx of newclients! Organising and assisting withthe set up of the new office will be UKTeam Manager, Andy James. Withfurther seminars planned in BritishColumbia and other regions ofCanada, our new office looks primedfor a busy year ahead.

Elsewhere in North Americaexpansion continues with our firstseminar in Atlanta, Georgia takingplace this month (July 2009).Additionally, new clients haveawarded their sales mandates toBCMS Corporate in both Californiaand New Orleans.

Mediterraneanand EasternEuropeExpansion in the Mediterranean

and Eastern Europe is continuingat a pace; we have now hosted ourfirst seminar in Romania, preparationfor which was highlighted in the lastissue of iDEAL. The event attracted asignificant number of interestedbusiness owners to the Chamber ofCommerce and Industry building inBucharest (below). Led by MehmetSoyer, expansion into Romania meansBCMS Corporate operations nowextend to three countries in theregion.

One of the fundamental challengesfor our European expansion iscommunicating with business ownerswho speak differing languages. To thisend, BCMS Corporate will shortlylaunch its Meditteranean and EasternEurope website in threelanguages: Bulgarian,Romanian and Turkish.(www.bcmsaka.com)

Coast to coast – by bike!

People go a long way to raise money for charity,walking, running or swimming a variety of distances,

all in aid of varying good causes. Few though exceed the26 miles of a marathon, however our Teeside-basedcyclist Joanne Cox undertook the challenging Coast-2-Coast cycle route, from Whitehaven to Roker inSunderland, covering an incredible 130 miles!The route, which is officially 131.69 miles long or211.93 kilometres, takes an average of 14 hours, splitover four days with a difficulty rating of 10/10. With anaverage of over 30 miles each day over undulatingterrain, it is estimated that over the entire course theaverage rider burns 5333 calories. If these figuresweren’t impressive enough, this is now the fourth yearthat Joanne has completed the course!This year Joanne rode the course in aid of the DiamondBlackfan Anaemia charity which helps people sufferingwith a rare blood disorder – she raised £365.

B CMS Co r p o r a t e • P h i l a n t h r o p y

Philanthropy“Do what you can, with what you have,where you are.”Quote on philanthropy attributed toTheodore RooseveltIt never ceases to impress us how much of theirtime many of our staff and indeed our clientsdevote to community and charitable causes.In each issue of i D E A L we will highlight justsome of the community and charitableactivities our staff are engaged in together withdetails of some of the charitable projects BCMSCorporate as a company also participates in.

Modern daySamaritans

Areport by TheCommunity Safety

Forum has acknowledgedthat Basingstoke andDeane, as a place to liveand work, is getting safer.There are a number of

initiatives being deployed in the area not least of which isthe ‘Street Pastor’ program which is spreading to townsand cities across the Country.Malcolm Murray, senior business manager at BCMSCorporate spends Friday evenings and into the earlyhours of Saturday morning as part of the Street Pastorteam in Basingstoke. He said, “Traipsing roundBasingstoke on a Friday night talking to teenagers, I’msure, is not everyone’s idea of a good night out but Policeand local councillors have acknowledged that what we dois worthwhile and has had a positive effect on the levels ofanti-social behaviour. What we do is organised throughChurches of various denominations but the purpose is notto preach to people, we just provide support which mightbe as simple as engaging young people in conversation todiffuse a potential argument or being a reassuringpresence to make people feel safer when they are out andabout.” He added, “Street Pastor is now well established inBasingstoke and myself and other volunteers have becomea regular feature of Friday nights. We are recognised bymany of the young people who will often now stop to chat– they certainly seem to appreciate that we are giving ofour own time and are there because we want to be.”Street Pastors began in Brixton, London, in 2003, basedon a model first developed in Jamaica.

Race for life

An incredible 680,000 people took part in CancerResearch’s ‘Race for Life’ across the UK this year,

raising over £62 million. One of the determinedcompetitors was Faye Beard from our Teeside office who,along with her mother, ran the five kilometre course atOrmesby Hall near Middlesbrough, along with 2000 otherpeople. Faye said “My mum and two aunts were alldiagnosed with breast cancer at the same time; it is due toa hereditary cancer gene in our family. ‘Race for Life’ is anincredibly worthwhile cause. I am glad to have taken partand contributed to the fight against cancer.” Faye and hermother raised a total of £600 in sponsorship.Taking place between May and July each year, ‘Race forLife’ is the largest women-only fundraising event in theUK. Since 1994 over four million women have helped thecharity to raise in excess of £240 million.

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BCMS Corporate Plantagenet House Kingsclere Newbury Berkshire RG20 4SWT: 01635 296191 F: 01635 299502 E: info@bcmscorporate.com www.bcmscorporate.com

Please find below a small selection of our recent deals.For a full listing of these please visit www.bcmscorporate.com/success-gallery

Latest success gallery