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Ten Steps to Selling Your Company

Introducing K3 Law

Selling Your Business? Why Tax Planning Is So Important

WHY

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# 1 ADVISER THE UK’S CORPORATE

MULTI AWARD WINNING

ENCOMPASSING ALL OF MARKET BUYER TARGETING

GLOBAL BUYER REACH

BESPOKE BUYER MATCHING ENGINE

UK BASED FOR UK SELLERS

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EXCITING TIMES AHEAD

“These are exciting times - we have a growing portfolio of clients and a growing team to deliver our trusted service to them.”

hilst the M&A market has created a challenging environment over the last 12 months, there is a very strong, positive ethos across the whole of KBS Corporate’s Operations team. We remain the leading performer for company sales activity in the UK and now hold the No 1 spot in Europe.

PETER KELLY OPERATIONS DIRECTOR

Our first full year under the ownership of Sun Capital demonstrated a lot of growth across all disciplines of the business. The number of M&A deals in the UK fell last year but at KBS Corporate we were still able to outperform the market. An increased cost of borrowing and enhanced financial due diligence undertaken by lenders has led to buyers being more selective about which companies they will acquire or at least pursue to develop their interest. Understanding buyers’ needs and their specific criteria has become more relevant, so the collaboration across the Operations division between the deal leaders, our researchers and our copywriters is imperative - to make sure we know what buyers are looking for and that we present our clients in the right way, giving them the best opportunity to sell. On the back of the resurgence in the M&A market at the start of 2024, with worldwide M&A activity up 18% in H1 (source: LSEG), we feel we are in a very strong position to springboard into FY25 in terms of the number of deals we complete and the income we will generate. We have a record pipeline of deals that have been agreed and are anticipated to be completed in the next three to six months, supporting the optimism we have. Along with the other members of K3 Capital Group, at KBS Corporate we cover the whole of the company sales market. Our view of the softening of economic conditions and potential reduction in interest rates means there is becoming an increased appetite for M&A activity. Many corporate acquirers and Private Equity funds have capital to utilise and, as such, we are excited about what the next 12 months will bring us.

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IN THIS ISSUE

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CREATED AND PUBLISHED BY KBS CORPORATE SALES LIMITED, KBS HOUSE, 5 SPRINGFIELD COURT, SUMMERFIELD ROAD, BOLTON, GREATER MANCHESTER, BL3 2NT TEL: +44 (0) 1204 555 081 EMAIL: enquiries@kbscorporate.com WEBSITE: www.kbscorporate.com

Exciting Times Ahead - Peter Kelly

KBS Commended Following Synergistic Screen Pages Sale

Tech and a Highly Skilled Team. The Perfect Research Mix 14 Our proprietary software and a dedicated, eager to-learn group of analysts work in harmony to seek the optimum acquirer for each opportunity.

Our first full year under the ownership of Sun Capital demonstrated a lot of growth across all disciplines of the business.

The Fire and Security Sector: Consolidation is Key Fire and security is a sector of particular expertise for KBS Corporate, and one in which we have orchestrated many successful sales through the years.

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Sarah Willcocks, former owner of Screen Pages, has commended KBS Corporate for overseeing her company’s sale.

Selling Your Business? Why Tax Planning is so Important 12 When the time comes to sell your business, what is the single biggest cost that will eat into your proceeds?

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On the cover

Working The Room: How We Keep Your Critical Data Watertight

Ten Steps to Selling your Company

Whichever type of business exit strategy you are planning, various factors need to be addressed for the transaction to be completed successfully.

What is a virtual data room, how does it work and why does it benefit those involved in a company sale?

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Introducing K3 Law

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Receiving the correct corporate legal advice is an essential requirement in any business sales transaction.

Post-Elections Signs Are Positive Dave Gardner, KBS Corporate Finance Managing Director, explains what can be expected in mid-market M&A following the General Election and how company owners can capitalise with the help of KBS.

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TEN STEPS TO SELLING YOUR COMPANY

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05. SELLING YOUR ASSETS By selling assets, we are not merely referring to buildings, machinery, equipment, furniture and other fixtures and fittings. The term also applies to intellectual property, accounts receivable, investments and even goodwill.

hichever type of business exit strategy you are planning, various factors need to be addressed for the transaction to be completed successfully.

A full sale is not the only option available. Some business owners decide they no longer want the responsibilities of controlling a company and agree a deal where they retain a shareholding and a less senior executive role, perhaps serving a ‘handover’ period for a certain length of time. Or they may have reached the point when retirement has become a very appealing prospect, whereas those not yet ready to wind down may be eager to begin a new business project in a different sector. The decision to sell could even be purely down to the market outlook with companies of a specific type in high demand. And there are different kinds of company sale - potential acquirers include existing business partners and family members, while trade buyers may be seeking to expand their market reach or add a greater range of products or services to their current portfolio. 01. ESTABLISHING A VALUATION The value of your company depends to an extent on how much a buyer is willing to pay for it. But we know how to identify the key value drivers which can be highlighted to attract and nurture the most appropriate, motivated acquirers to generate a competitive bidding environment, using comparisons with equivalent company sales in your sector. 02. SELLING YOUR SHARES When you sell your company, the transaction will necessitate the transfer of shares to the buyer for an agreed value. If the acquirer is a third party unconnected to the business, all shareholders will have to agree to sell their shares to complete a full sale. Also transferred to the new owners will be the company’s assets and liabilities. Assets can either be valued separately to the shares or bundled together, but any debts attached to the business will be factored into negotiations by the acquirer. 03. PARTIAL BUSINESS SALES You may decide you want to sell your company only partially, thus remaining as a shareholder – but there are aspects of this which you need to bear in mind. Potential issues surround the other people involved in, or affected by, the sale. For example, how will you divide responsibilities with the new part owner? This may require a shareholders’ agreement to avert complications, while any staff being directly impacted will need to be informed before the change of ownership happens to prevent any breach of employees’ rights. 04. SHAREHOLDER PRE-EMPTION RIGHTS Depending on what is contained in your company’s Articles of Association or Memorandum of Association, there could be restrictions on the transfer of shares whereby the shares you want to sell or transfer must first be offered to a specific body of individuals, usually the other remaining shareholders. In other words, if such a restriction has been legally stipulated, you must offer any fellow shareholders a first right of refusal before you can sell your shares to an outsider. We outline 10 steps required in the sale process of your company and how KBS Corporate can help you to navigate them.

Thought should be given to what each individual asset is worth to determine the total value of the business when selling a company.

06. TRANSFER OF LIABILITIES This refers to financial commitments such as accounts payable, salaries, taxes and loans, which become the responsibility of the new owner when you sell your limited company. These liabilities will be scrutinised by the acquirer as part of their due diligence process before the transaction is completed, so it is advisable to settle as many debts as possible and present the clearest and most accurate picture of the company’s financial situation. 07. POTENTIAL BUYER BACKGROUND CHECKS We can help you with all the points listed here, but joining forces with KBS Corporate will save you a great deal of time and effort with this one especially. Identifying a buyer who is readily able to demonstrate proof of funding for their acquisition is something we take extremely seriously, and we will conduct all the necessary credit checks and investigation and commission the required legal documents to that effect. 08. SAFEGUARDING THE COMPANY This is another area where you can be assured KBS Corporate have got your back. In the undesirable event of your sale breaking down, we will have ensured you are protected by a Non-Disclosure Agreement (NDA) which blocks any confidential information being disclosed. If any of that data was used by the other party for the benefit of their own business or for any other commercial gain, in contravention of the NDA, you would be protected legally. 09. CAPITAL GAINS TAX A capital gain is the profit you make when selling a company in comparison to the amount you paid for it. The tax you pay will be calculated on the amount of profit, not the overall funds received from the sale. However, you may qualify for Business Asset Disposable Relief, which means you would pay a lower Capital Gains Tax rate of 10% on the first £1million rather than 20%. 10. INFORM COMPANIES HOUSE Once the transfer of shares to the new owner has been completed, Companies House must be informed of a change to where the company’s records are kept and the identities of any new directors or company secretaries within 14 days. The time limit is 15 days to inform Companies House about changes to your constitution or Articles of Association, one month if you issue more shares in your company, and 21 days for all other changes.

You will also need to inform HMRC by completing a company tax return to cover the accounting period up to the sale date.

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f you were creating a Venn diagram of industries, fire and security would certainly find itself inside a sub-section where the circles overlap.

The sector could be coloured in a shade derived from those allocated to the engineering, construction and manufacturing industries – which serves to illustrate its appeal to company buyers. That’s because a prevailing theme in business sales currently is consolidation. Acquirers, especially in the fire and security sector, are increasingly taking on the guise of a top Premier League manager like Pep Guardiola or Mikel Arteta during a transfer window. “Buyers of fire and security companies are really looking to add depth to their group in certain areas, a bit like a football squad,” explained Matthew Sibley, KBS Corporate Associate Director. “The main theme these days is consolidation to increase breadth and depth in two sectors that are very complementary to each other. “There are also other cases where acquirers focus on opportunities which can open doors to more potential revenue streams, such as companies whose client bases are, for example, shopping centres or local authorities. They are looking to add more breadth to their service offering and more depth in that they call upsell and cross-sell. “But the main focus is on the synergistic USP element, as in, if I’m a buyer, what can you as a seller bring me that I don’t already have?” The answer? Something that takes them beyond their own circle on the Venn diagram, or, relating to the football analogy, a different skillset to what the squad already possesses. Fire and security continues to be a highly productive sector for KBS and in the spring of 2024, New Path, a Southampton based group that acquires well-established businesses which have built up brand recognition and reputation over many years, made two acquisitions through us. One of those was Electrifire, a Kent-based specialist in fire alarm installation, access control and CCTV systems, in a transaction overseen by Matthew Sibley. “Some groups now have the capability to roll out multiple deals and obviously the quicker they do that the larger they grow, so consolidation is really starting to snowball for certain buyers in the industry,” said Matthew.

THE FIRE AND SECURITY SECTOR: CONSOLIDATION IS KEY Fire and security is a sector of particular expertise for KBS Corporate, and one in which we have orchestrated many successful sales through the years. Matthew Sibley, Associate Director, discusses the industry’s current trends and what company owners need to know.

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Matthew Sibley, KBS Corporate Associate Director

“Now, buyers are keen to keep the vendor in place for a transition period to join them on the journey of growing the company. That vision can also appeal to the vendor, to work an extra year or two to be a part of something even bigger and better. “The average age of our clients is getting younger because people want extra resources and support to help them grow, so that people with young families, for instance, can at least split themselves more evenly rather than being too focused on one aspect of life.” “Buyers probably used to be more flexible, but nowadays they want a vendor to be direct in terms of whether they want to remain with the company post-sale, and if so, for how long and what they would be comfortable with doing,” said Matthew. “They like sellers to almost have red lines, in a way – ‘this is what I want, this is what I’m prepared to accept’. That makes the decision easier for the buyer because they know whether it suits them or not. “Sellers sometimes try to be amenable and flexible by saying ‘well, whatever you want’, but the buyer doesn’t want to hear that - they just want to be able to make a decision.” If you are thinking about selling your fire and security company, or a business in any other sector, call us for a confidential, free, no-obligation discussion on 0161 258 0118. What’s a key piece of advice for someone preparing to sell their company?

“I’ve been with KBS for 10 years and it’s interesting to have seen acquirers come and go during that time. When I first started, there were large entities in the sector that are no longer as active in acquisitions as they used to be, and then new players came into the market and started making a name for themselves.

“Others come along with an acquisition template in terms of how they put forward offers and if it works, they keep going with it.

“Fire and security are bundled together a lot of the time and whilst they should also be considered separately, as long as a business has a USP then it will attract interest and go places, in conjunction with the marketing we do to highlight a strength that buyers find appealing.”

How does experience in the fire and security sector help to achieve the best possible deal for a client?

“It’s about knowing all the buyers and having the experience of how they operate,” said Matthew.

“Even when they have just made acquisitions and are in a period of integration, some acquirers are receptive to any appropriate opportunity and might say ‘yes, I want to pursue this, but we can’t right now’ or ‘no, I don’t want to pursue it at all’. “You learn to know who will be interested in acquiring certain types of company and you will always have people you’ve never heard of trying to become the next thing in the industry. “You build up a bank of knowledge of who likes what, how they operate and what to expect, so that you can advise your clients accordingly. For instance, there might be a disparity between the buyer and the client in terms of focus and detail on the KPIs of a company, which means they may not be the best match.” There are also other important factors which influence how Matthew strives to facilitate the ideal outcome for the vendor of a fire and security company. “Buyers these days are very keen on continuity as well as USPs,” he explained. “That used to mean that as long as you had people who could run the business when you’re not there on a day-to-day basis, that would be fine.

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KBS COMMENDED FOLLOWING SYNERGISTIC SCREEN PAGES SALE

Screen Pages, which began trading in 1997, offers a wide range of e-commerce services, specialising in the design, build, hosting and support of mobile-first websites and applications for merchants and companies seeking digital transformation and online growth. The company also provides digital marketing and consultancy services. Recognising the need for fresh impetus to accelerate Screen Pages’ growth trajectory, Sarah instructed KBS to find a buyer and coordinate the sale. The eventual acquirer was identified by Sarah as an ideal fit, with the former Screen Pages owner staying on as Head of E-Commerce for the Moore-Wilson group. Moore-Wilson, based in London and Salisbury, is a full-service creative and digital agency which provides strategy, branding, web development, digital marketing, website support and fully managed hosting. arah Willcocks, former owner of Screen Pages, has commended KBS Corporate for overseeing her company’s sale to an acquirer with similar corporate and cultural values, signposting a sparkling future for both businesses. “As the sole owner, I wanted to look at whether a merger or acquisition would be an option, and I wanted a buyer who would take on the whole company, keeping all the staff and clients rather than cannibalising it. I was open to opportunities to become part of a larger company and it took a while to find the right buyer because some interested parties did want to cannibalise the company. “Moore-Wilson’s objective is that they want to continue running Screen Pages as a wholly owned subsidiary of the wider group - as they have with a previous acquisition (Design Inc), which is another reason why it was attractive and a good opportunity.” “Screen Pages needed investment to grow. It had struggled to grow fast enough organically post-Covid,” explained Sarah.

“We were presented with a lot of different interested parties by KBS, but I had a good feeling about Moore-Wilson because we share the same corporate values - which is really important,” said Sarah. “Both companies have good staff retention, both companies have retained our clients over many years. If we think something is wrong for the client, we say no and recommend the right thing, fostering a longer-term relationship with the client as they will remain with you if they know you’ve got their best interests at heart. It was a very good fit from a cultural point of view, and I think that fosters trust. “What happened is that when I announced the sale to all the clients and all the staff, they loved it. That smoothed the way and made it a lot easier to get the deal done and more attractive for everyone concerned, not only myself and the buyer. It was important that the transition and the integration of the two companies would be as easy as possible.” “There are a bunch of services we wanted to offer our clients for which we would have needed to borrow a substantial amount of money to build up those practices,” said Sarah. “Part of the reasoning behind selling the company was to merge with, or be acquired by, another company that could offer those complementary services. And that’s what’s happened. “The opportunities for growth are already bearing fruit – we’ve sold some of the services offered by the Moore-Wilson group to some of our existing clients. In addition, they have put us in touch with someone who needs an e-commerce website because they didn’t have an e-commerce practice before. “And as a larger group with 50 staff instead of 15, collectively we are in a better position to win deals. I think the opportunities for growth are that much greater being part of a bigger group with additional services.” Already, the benefits of the partnership between Moore-Wilson and Screen Pages are being delivered.

A significant part of Moore-Wilson’s appeal to Sarah as a potential acquirer was the values they each applied to their business approach.

Steve Wilson, CEO of the Moore-Wilson group, concurred with Sarah’s thoughts on the two companies being an ideal match.

“I would recommend KBS for sure – in fact, I already have.” - Sarah Willcocks, former owner of Screen Pages .

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“Screen Pages has been on my radar for some time as a highly respected e-commerce specialist that could potentially dovetail very well with the Moore-Wilson structure,” he said. “During exploratory conversations it quickly became clear there were strong synergies in our approach and shared client requirements – as well as, vitally, a cultural ‘fit’. “We look forward to integrating the Screen Pages team and processes into the group ‘family’ and connecting the Moore-Wilson and Design Inc teams to realise the full ‘cross-pollination’ between all three of the group businesses.” Praising the role the KBS team, led by Oliver Rigby, Corporate Deal Executive, played in the transaction, Sarah said she realised that having the UK’s leading mid-market company sales adviser in her corner was vitally important in enabling her to concentrate on the most important aspect – ensuring Screen Pages kept performing to maximum effect.

“I can’t fault KBS,” said Sarah. “It’s been a very good experience and the way the deal was structured was good value for money for a company of our size. “As a business owner, you are busy running your business and you can’t do that and sell the company without some help – that was the conclusion I quickly came to. You can waste so much time and not be focused on your business. “It took a couple of years, but I thought there was very good pre qualification of the interested parties, the door was always open for advice about the process and Oliver was very helpful.

“I would recommend KBS for sure – in fact, I already have.”

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SELLING YOUR BUSINESS? WHY TAX PLANNING IS SO IMPORTANT

03. ALIGN BUSINESS SALES TAX WITH YOUR COMPANY’S OBJECTIVES

hen the time comes to sell your business, what is the single biggest cost that will eat into your proceeds? Yes, that’s right, it’s tax.

Passing a family-owned business to the next generation can trigger prohibitive tax costs, but transactions can be structured to protect asset value and allow founder family members to realise their value in a tax efficient way. Also, a corporate group between the shareholders can be separated using a demerger process that removes the considerable tax costs which otherwise arise.

And it may not be only one type of tax either. The varieties which can apply to company sales are Capital Gains Tax, Corporation Tax, Income Tax, Inheritance Tax and Stamp Duty. Which of those will apply to your circumstances depends upon several factors, including the type of business you are selling and your taxable profit. Don’t worry, though. Relief is available. There is the potential to reduce your Capital Gains Tax liabilities through the Business Asset Disposable Relief and Deferral Relief claim processes. And, of course, you always have the option of seeking professional, expert advice. If you enlist the services of K3 Tax Advisory, a sister company of KBS Corporate, you have the option of receiving a pre-sale tax review that will clarify exactly where you stand regarding an aspect of a business transaction which can be difficult to understand. But at the outset of the entire process, in terms of making sure you are fully prepared for the tax considerations that inevitably need to be factored into your business sale, which measures should you take?

04. CONSIDER PLANS FOR THE SALE PROCEEDS

While it may be possible to accept share payments as a means of deferring tax payable on the sale proceeds, you should consider how much you will require each year for the life you and your family wish to lead following your business sale. You can also reduce your Inheritance Tax burden by putting gifts for beneficiaries into a trust.

Now let’s look at some of the specific tax considerations that can be relevant to a company sale.

CAPITAL GAINS TAX (CGT)

You may be required to pay CGT if you make a profit when selling your business. CGT is applied exclusively to the value of the profit made and not the total amount received. The assets you may need to pay tax on include:

HERE ARE FOUR TIPS:

01. PLAN AHEAD

• Land and property • Plant and machinery • Company shares • Registered trademarks and intellectual property

Pre-sale restructuring could mean less of your sale proceeds ends up being paid in tax, and the review K3 Tax Advisory can undertake before the transaction goes ahead can identify any tax risks.

Corporation Tax

02. REFINE YOUR EXIT STRATEGY

You will be required to pay Corporation Tax on profits for a business operating as one of the following: • Limited company • Foreign company with a UK-based office • Club, co-operative or other unincorporated association

The best time to structure for a tax-efficient business exit is before the sale is being negotiated. Advice may be needed on removing tax obstacles to a successful future disposal to provide the widest range of sale opportunities in the future.

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DEFERRAL RELIEF

Taxable profits include the money your business generates from trading and investments.

When selling your business or disposing of an asset, you usually pay CGT for the tax year in which the transaction takes place.

If you are looking to sell a limited company and wish to dispose of company assets, you may also be subject to Corporation Tax on chargeable gains. Typically, the gain is the difference between what you originally paid for the asset and what you will be selling it for.

Deferral Relief allows you to treat the gain as not arising until a future date if you decide to acquire Enterprise Investment Scheme (EIS) shares. Subsequently, the gain may be charged to CGT in a later tax year during which you dispose of the EIS shares.

INHERITANCE TAX

T AX IMPLICATIONS OF SHARES

If you have net assets of more than £325,000 when you die, your estate may be subject to Inheritance Tax (IHT) at 40% of the excess.

In some cases, you may consider accepting shares as payment for your business, allowing you to defer your CGT liability and, potentially, qualify for relief from Inheritance Tax – although shares may result in the loss of BADR. If you need any advice about the tax implications of your business sale, or more general tax guidance, K3 Tax Advisory boasts a team of skilled tax specialists who can work alongside you and offer any support you require.

The rules regarding business assets mean business owners have more to think about when it comes to IHT planning, especially if you have a mixture of business and investment assets. In some cases, mixing assets can mean the whole value is protected from IHT, whilst in others it can mean the whole value is subject to IHT. Careful planning can therefore have a significant impact.

It is also likely your retirement plans or plans to sell the business will have a significant impact on your IHT position.

Whether it is a full or partial business sale you wish to pursue, there are tax liabilities to weigh up and identifying your goals will provide you with a structured approach. However, as mentioned above, there are also ways to mitigate those liabilities, in the form of relief schemes: Business Asset Disposal Relief (BADR) Initially introduced as Entrepreneurs’ Relief until the title was changed in 2020, BADR allows you to reduce the tax on gains when selling your business. If eligible, BADR can reduce the rate of CGT to 10% when disposing of your business or assets. The scheme allows you to claim relief for up to £1million in your lifetime and you are required to have owned your company for over two years as a sole trader or as a business partner.

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TECH AND A HIGHLY SKILLED TEAM: THE PERFECT RESEARCH MIX

Our proprietary software and a dedicated, eager-to-learn group of analysts work in harmony to seek the optimum acquirer for each opportunity.

echnology plays a huge part in our quest to find the ideal buyer for every company we are instructed to sell.

“We had a record year in that respect and a significant increase in all our other KPIs. It means we’ve been able to have a strong increase from a resource perspective – we keep performing better, so we’ve more headroom to keep building on those results. “We have 18 full-time researchers in the department now and our focus for the next year is to build on those successes by focusing on our people from a development perspective.” The foundation for what is being accomplished is a genuine collective effort. Using a football analogy, goals are coming from every part of the team. “The way the Research department judges how effectively we are performing is based on the number of NDAs (Non-Disclosure Agreements) we are bringing in, but also on the number of deals that happen where a researcher received the NDA or reached out to the buyer,” explained Julie. “For me, the biggest success we’ve had as a department is the spread of deals across our researchers, 18 of whom had deals complete last year – an increase of five from the previous year.

But while we are proud to have developed our own bespoke, proprietary software in the Buyer Matching Engine, which streamlines the research process effectively, we never lose sight of an even more important aspect – our people. We don’t just want team members utilising our state-of-the-art facility which uses ‘big data’ and algorithms to identify the most appropriate and motivated buyers. Instead, we want team members who are best-in-class, widely knowledgeable, fully trained and inspired to produce an optimal range of potential acquirers for each opportunity presented.

And this approach is certainly generating the desired results.

“In financial year 23-24, the research department increased our number of completed deals by 15%,” said Julie Greenfield, KBS Corporate’s Head of Research.

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“And we are seeing them get deals over the line significantly quicker. All the improvements we’ve made over the last two years in our research strategy process mean we’ve had researchers who have been with the business for less than nine months and have already had two or three deals complete.” Although our cutting-edge technology enables the Research Analysts to accurately search and filter a variety of buyer criteria, vital skills are needed to interpret the data and refine the information to ensure company owners receive the highest possible standard of service. “The human element of having a pair of eyes on everything we do is crucial to making sure our clients get everything they need from us, and to increase the chance of putting the opportunities in front of the people our clients would want us to,” said Julie. “We have a strong focus on quality control and implementing even better procedures, increasing the time and energy being put into coaching, feedback and development and working with the researchers to find out their individual goals so we can support them in reaching them. The structure of the department has been strengthened with the arrival of Dan Greenfield, joining Josh Byrne in key Research Strategy roles supporting Julie to maximise the team’s performance. “Josh, our Research Strategy Manager, joined the company in 2019 and has been the spearhead in building and driving our research strategy process,” said Julie. “He and Dan bring over 20 years of experience between them to the team, focusing on all areas of M&A research. “What we are aiming for with the introduction of Dan is to streamline our entire department at a strategic level, enhance our quality control processes and give our researchers more dedicated one-on-one time to discuss and review their work, coach them in specific areas and look at the “We want our Research Analysts to work with the most experienced people and to keep consistently improving their skillsets.”

potential for specialisms, focusing on building relationships with buyers in key sectors where we are seeing increasing activity.

“We are in discussions about building new tools to help us have centralised databases from a research perspective so we can build on our success for the next client. We’ve also not exhausted the possibilities in AI yet and exploring it more is the plan for the year ahead. “All of that can only be a positive in terms of results for FY25.” And yet, while the science and technology at our disposal offers fantastic functionality, always at the front and centre of the Research team’s achievements is its people. “In addition to all the optimisation we are doing from a research perspective, we are also focusing on the wellbeing side of our team members,” added Julie. “To get the most from them in terms of efficiencies, we make sure we give back to them by way of flexibility and hybrid working. “A really big focus for me from a people management perspective is that the more we help them, the more we get from them in the work they are doing and the deals that are being completed – and we have absolutely proven that over the last year.”

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WORKING THE ROOM: HOW WE KEEP YOUR CRITICAL DATA WATERTIGHT

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George Dalton, KBS Corporate Finance Manager, who works alongside John on transactions, described another benefit of the VDR.

hat is a virtual data room, how does it work and why does it benefit those involved in a company sale? John Hunt and George Dalton of KBS Corporate Finance explain.

“It’s also good for keeping momentum on a deal,” said George. “You might have the buyer’s advisers stating they have accessed the portal and downloaded documents etc when in actual fact they haven’t, because we can view this as administrators of the portal. We’ve had scenarios where each party may blame the other over whether information has been downloaded or who is holding who up, but we can corroborate that. “It’s a well-trodden path for us - the key outcome is that we have control of the entirety of the data room process. We can ensure any relevant party has certain levels of access, making the process a lot smoother. “The software is of a high standard, it can differentiate us from other corporate finance companies - it’s a sophisticated, instant system. If you want to make amendments or updates, it happens quickly.” John added: “What’s really good is that when you grant someone access, for example the CEO of the acquirer, we know when they have gone in, how frequently, what they have looked at and what they have done with that information – have they saved it offline or printed it out?” And how do KBS Corporate clients respond to virtual data rooms? “The feedback from clients is always very positive,” said John. “Quite often, because they have never been through a company sale process before, it’s all new to them and once they see how simple and effective VDRs are to work with, they are instantly impressed. “From a security perspective, another thing we can do is overlay a watermark on all the documents in the data room. The watermark will be the potential buyer’s name so if that information gets into the public domain, we will know the identity of the party that has breached confidentiality. “A virtual data room facilitates the whole process. And when the deal has legally completed, we close the data room and put the entire content on memory sticks, which are password protected, and these are shared with the relevant parties.

Confidentiality within a company sale transaction is of the utmost importance – not only in terms of who should know the deal is happening, but the sharing of sensitive information too. At KBS Corporate, we apply the highest levels of privacy to every aspect of the process. This is especially true when it comes to due diligence, one of the most critical features of any sale. How do we ensure the vital documents that underpin the transaction are seen only by the appropriate eyes? By setting up a secure virtual data room. As John Hunt, KBS Corporate Finance Director explained, the virtual data rooms we set up are entirely technological and hosted online. Unlike the old-fashioned version, they contain no tables, chairs – or paper. “As the name suggests, in the ‘good old days’ it used to be a physical room full of data, full of boxes, full of paper,” said John. “All party advisers would sit in that room for as long as necessary, reviewing relevant documents. “Time has moved on, and we now have virtual data rooms (VDRs). We set up the VDR, which comprises all the information a prospective purchaser will review as part of their due diligence within the transaction, and we use a specialist software provider called Firmex. “The VDR is set up for all parties, as part of the due diligence process, for the prospective buyer to review all relevant documentation on the target company. This includes all relevant due diligence streams – e.g. legal, accounting, tax, insurance, environmental, commercial - and the buyer will have dedicated advisers for each line of diligence. But if multiple different advisers are involved in accessing the data, does that not increase the risk of information falling into the wrong hands? Fear not, because every feasible measure is taken to ensure the process remains airtight. “The VDR is fantastic for confidentiality, as parties are not sending emails which can easily be intercepted,” said John. “Sometimes the volume of information they are sending over is so considerable that either it can’t be sent via email, or sending via a non-confidential third party platform, e.g. via WeTransfer, there are risks. “In a VDR, the client signs in with their own personal password, which only they know, and they can upload directly online into Firmex at the flick of a button, with confidence that whatever information is sent over is securely within the data room. “When it comes to maintaining access to the data, there are several levels of access we can grant to any party, which is established depending on who is accessing the data room. You might have commercial, legal and financial due diligence with only one of these parties having access to their own area, depending on the sensitivity of the information.” Those who may be unfamiliar with the concept may consider that to be a contradictory term. How can a room be virtual? “A data room can frequently contain thousands of documents, depending on the extent and scrutiny of due diligence the buyer wants to go into.”

“The data room is then archived securely.”

Virtual data rooms are completely secure, user friendly, environmentally sustainable…and a key tool used by KBS as part of the sale process.

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POST-ELECTION SIGNS ARE POSITIVE Dave Gardner, KBS Corporate Finance Managing Director, explains what can be expected in mid-market M&A following the General Election and how company owners can capitalise with the help of KBS.

Although early-year predictions foretold quicker progress, there are still positive signs ahead, and for better or worse the post-election period may also generate a sharp change. In particular, it has been reported that the current Capital Gains Tax rate of 20% could be increased after the election. This is prompting many UK company owners to accelerate their exit plans to avoid a potentially greater tax liability. One thing for certain is that company owners looking to sell should very much have their finger on the pulse. At KBS Corporate, we remain optimistic and are ready to help with the timing and strategy of your exit plans. Call our experts on 0161 660 9963 for a confidential discussion about how we can fulfil your company exit requirements and more information about the service we provide.

hen we looked ahead to what the short-to-medium term future held for our industry at the start of 2024, prospects were bright for a corporate finance market boost.

Financial forecasters were predicting UK interest rates would fall this year, potentially from 5.25% to 4.25%, and with global energy prices and the wholesale cost of oil beginning to drop, analysts were suggesting inflation could dip below 2% by summer. Indeed, the inflation rate had dropped to 2.3% by April, but interest had been held steady. Next thing, any imminent cuts that experts had deemed likely were delayed. So, what changed? The announcement that a General Election would take place on 4th July. While it might have been stretching reality to suggest 2024 would be an exceptional year for mid-market company sales, especially after post-COVID recovery growth in 2022 and 2023, the economic signals still indicated this could be an ideal year for company owners to proceed with an exit. With gradual 0.25% interest decreases predicted for September and November, the International Monetary Fund believes the UK’s interest rates should fall to 3.5% by the end of 2025.

Inform | kbscorporate.com

INTRODUCING K3 LAW

The team ranked #1 between 2019-2021 and #5 for 2022-2023 for volume of corporate transactions in the UK, focused mainly on selling, buying or investing in businesses (source: Experian Corpfin). K3 Law’s sell-side legal specialists have vast experience of all the difficulties, complexities and pitfalls that can be encountered during transactions, which qualifies them to proactively negotiate and be solution-focused.

eceiving the correct corporate legal advice is an essential requirement in any business sales transaction. For years, KBS Corporate has provided its clients with the opportunity to team up with one of our partnered, external leading UK legal services firms.

Now, we are offering the services of a new sister company within the K3 Capital Group, K3 Law. Its team comprises only best-in-class lawyers who have been handpicked from the UK’s top 50 law firms, with the appropriate levels of expertise. Formerly an integral part of a top-50 national corporate law firm, the team has worked closely with K3 Capital Group since 2012 and acted on more than 300 transactions for KBS Corporate, KBS Corporate Finance and Knightsbridge.

Learn more at: k3law.com

www.k3law.com

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KBS House 5 Springfield Court Summerfield Road Bolton Greater Manchester BL3 2NT

T: 01204 291 590 E: enquiries@kbscorporate.com

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