Join us for a 60-minute ‘preparing for Brexit’ event. Deal or No Deal, companies need to be prepared for Brexit. Receive practical advice from two local experts as to how to prepare for it in relation to importing and exporting. Using their Brexit Checklist as a basis for the event, guests will also have the opportunity to ask questions. Calling all exporters/importers to/from the EU…are you ready for Brexit? Are you fully prepared for the UK leaving the EU as of 1st January 2021?
Featuring speakers from LV Shipping and Import Export Support to help talk you through trading with the EU post-Brexit and how to ensure your own business transition during this challenging time runs as smoothly as possible.
Speakers: Kevin Walsh, LV Shipping Ltd & Tracey Renshaw, Import Export Support Ltd
With less than two months until the Brexit deadline, Chris Scargill, Partner and business advisor at MHA Larking Gowen, believes trading with Europe after Brexit, deal or no deal, will be more challenging than many businesses are currently willing to admit.
Chris explained: “Due to COVID-19 the majority of British companies involved in exporting to Europe have not been able to give Brexit the attention they should, and unfortunately, some are in denial about the scale of the challenge. While there are a number of solutions available to facilitate EU trade, it is not as simple as getting an EU EORI number* to solve all supply chain challenges.”
A poll of some 50 import and export businesses held during our recent MHA Larking Gowen Brexit webinar noted only 8% of businesses felt fully prepared for exiting the EU, although pleasingly, 37% felt they were more than 50% prepared right now.
Chris continued: “The problems Brexit will throw up are surmountable, but they also require a long-term strategy to adjust to new trading arrangements and regulatory issues. The lack of preparedness is very understandable given the pandemic, but businesses now need to act promptly and get in the right mindset to see Brexit through over the next five to ten years.
“It is crucial to realise that although a deal will bring great relief to businesses and their bottom line by removing the cost of duty tariffs, the legal and regulatory as well as administrative costs will remain. For example, customs declarations cost money, irrespective of any actual duty being charged. As an estimate, if a company has 2,000 declarations to make, it could cost potentially £50,000 to employ an agent to handle this volume of paperwork. Being unprepared and getting caught out will cost even more; if goods turn up at the border without the right paperwork they will just be stuck in the port.
“Due to COVID-19 and the misconception that a deal means trading will continue as normal, we have sleepwalked into a situation where, less than two months away from the biggest change to the UK’s trading relationships in our lifetime, many businesses are unprepared. It is not too late for companies to get their house in order, but for many, this will have to entail looking beyond specific fixes, like hiring a customs agent or thinking about a subsidiary in Europe, important though these steps are.”
*An EORI number, or Economic Operators Registration and Identification number, is needed to move goods between the UK and non-EU countries.
Visit our dedicated Brexit Hub for more information and further updates.
CHIEF will be switched off on 31st March 2023 Our message is: do not delay, make a plan for CDSAs many of us are aware, import declarations will soon be migrated to CDS.
The Government have started the countdown to CHIEF’s shutdown, setting 30 September 2022 as the date for CDS to handle all import declarations, and the last date for export declarations in CHIEF will be 30 March 2023.
To avoid delays and issues at the border, your preparation for this change will be as important as those made for Brexit.
Last week’s announcement
“HMRC will be closing its Customs Handling of Import and Export Freight (CHIEF) system on 31 March 2023. From this date, all businesses will need to declare goods through the Customs Declaration Service (CDS). . .
CDS has been developed over a number of years in consultation with the border industry and will provide a more secure and stable platform that has the capacity and capability to grow in line with the government’s ambitious trade plans.
The move to one system for all imports and exports will also deliver savings for the taxpayer”.
3. If you use an Agent to submit your declarations you should check what their plans are to get CDS ready. You will need to give them the relevant access to CDS and agree a revised instruction and checking process
4. If you submit declarations using a third party software provider then make sure that you engage with them so that you can update your systems
5. You might like to try the Trader Dress Rehearsal Service, with the assistance of your software provider. This lets you test your readiness and submit different declaration scenarios in a simulated Customs Declaration Service.
The government has made £20 million available for small and medium-sized businesses who can now apply for a grant to support training or professional advice needed for the changes to trade rules with the EU post-Brexit.
The SME Brexit Support Fund aims to help businesses prepare for import controls which come into force from April and July. Up to £2,000 can be applied for in total through two types of grants.
Grant for professional advice
These grants can be used towards professional advice so that your business can meet its customs, excise, import VAT and security declaration requirements.
Grant for training
These grants can also be used for training on the following:
How to complete customs declarations.
How to manage customs processes and use customs software and systems.
Specific import and export related aspects, including VAT, excise and rules of origin
Your business must:
Be established in the UK for at least 12 months before submitting the application, or currently hold Authorised Economic Operator Status
Not have previously failed to meet its tax or customs obligations
Have no more than 500 employees
Have no more than £100 million in turnover
Import or export goods between Great Britain and the EU, or move goods between Great Britain and Northern Ireland
Your business must also either:
Complete (or intend to complete) import or export declarations internally for its own goods
Use someone else to complete import or export declarations but requires additional capability internally to effectively import or export, such as advice on rules of origin or dealing with a supply chain
Applications will close on 30 June 2021 or earlier if all funding is allocated before this date. You can find more information, including how to apply for a grant, via the link below:
This article was written by Donna Parsons, an assistant manager in the Norwich Business team at Price Bailey. If you have any questions and would like to speak to Donna, please contact us on the form below.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide, and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.
You can view this article in its original setting with Price BaileyHere
Last year was a mixed year for the UK M&A and private equity markets. With the announcement of the first lockdown in the spring of 2020, the country and all its dealmakers held their breath, and acquirers stepped back to see how the market and opportunities would develop.
Consequently, deal volumes and values dropped as some decided to wait, while others accepted a lower price. Yet, adapt is what we did and come the second half of 2020, the M&A and private equity market made moves back toward recovery, as news of the vaccine and the temporary easing of lockdown measures bought with it some renewed confidence. Now, in the early stages of 2021 and living in reintroduced lockdown measures, we look at the lay of the transactional landscape and notice, among other trends, the increasing interest of overseas buyers on the UK horizon. In this article, we look at the growing trend in overseas investment in and out of the UK and provide our thoughts on what to do if you are the object of overseas interest.
According to a recent LexisNexis report on UK Public M&A in 2020, of the 42 firm offers announced, 62% involved overseas bidders, including 8 of the ten deals that were valued at over £1bn each. We have observed that this growing trend in the public markets is also being mirrored in the private mid-market with a growing number of overseas to UK deals vs UK to UK.
Interest from Euro and Dollar corporate buyers and funds is due to various reasons, including Brexit and the continued impact of the COVID pandemic. We look at some of these in further detail here:
Playing to our strengths – it is unsurprising that both the impact of Brexit and COVID are dominating UK business news; however, it is also important to keep in mind the reasons the UK has been and continues to be an attractive place to do business.
• A top European economy – despite the noise surrounding Brexit, the UK is still one of the biggest economies in Europe, second to Germany. The UK continues to provide a key gateway to Europe for US and Asian purchasers. For US purchasers, there can also sometimes be an easier language and cultural fit with businesses in the UK than in other parts of Europe, increasing the attractiveness of UK businesses.
• Growth industries – whilst some markets are experiencing challenging and uncertain conditions; many sectors continue to experience growth that is likely to be sustainable. To take full advantage of this, companies need a physical presence in the UK, and overseas buyers need to acquire established local businesses to increase their footprint to benefit from that growth.
• Intellectual property (IP) – the UK is one of the major global creators of IP. In a global market, being the cheapest supplier is not sustainable in the long term. We have seen overseas buyers, particularly those from low-cost markets, look to acquire UK businesses to gain control of IP to safeguard the longevity of their own business.
Capitalising on uncertainty – we cannot ignore the turbulence caused by both the ongoing COVID restrictions, particularly in the UK, and the final severing of ties with the EU. From a UK business perspective, there have been significant winners and losers over the last 12 months. Across every sector, the focus has been on how business owners adapted their business models, cut discretionary spending and preserve profits. For acquirers, market conditions over the past couple of years have resulted in the weakened pound making UK assets more attractive to overseas buyers. COVID has led to expectations on values reducing in some situations. What this creates for strategic buyers looking to enter the UK market or expand their existing presence is an opportunity to do so at a lower cost.
Continuation of UK trade – in other instances, the UK’s departure from the EU at the end of last year has caused some overseas corporates to acquire in the UK to continue trading here with fewer restrictions. Interestingly, we are observing the reverse being true with UK businesses acquiring businesses in Europe to enable the continuation of Eurozone trade post Brexit.
Availability of cash and lower borrowing costs – the cost of debt globally is at an all-time low at present, and there is plenty of cash in financial institutions that need to be deployed. Access to cheap cash is helping to fuel acquisitions.
New work practices removing barriers – as in other sectors, technology is making the transaction easier to manage remotely and, thus, cross-border deals easier. With travel restrictions across the world, it’s now common to buy a business without visiting the site or meeting the management team face to face. In the longer term, this raises challenges for physical and cultural integration.
Interest from overseas buyers and funds has been steadily increasing since 2016’s referendum result, and we believe we can expect to see continued interest for the next 12 months. Where acquisitions are strategic and not hostile, this may provide a much-needed boost to the UK economy. Nevertheless, every potential opportunity to sell (whether to an overseas and domestic bidder) should be assessed on its individual merits. Below, we provide some of our thoughts on what business owners should consider when considering selling to an overseas buyer.
What to consider if an overseas buyer approaches your business
Businesses can often be subject to unprovoked interest from acquirers. Whether a business is actively looking to sell or not, an approach, particularly one from an overseas buyer, can often incite more questions about the future of the business than it does answers. As Corporate Finance advisors, we advise businesses looking to acquire on or off-market opportunities and businesses looking to sell. We have provided below our top 5 tips for what business owners should consider if an overseas buyer approaches them:
Understand what you want from the deal – First and foremost, it is important to have a clear idea of what is important to you and the business’ shareholders both in the deal and for the continuation of the business. This is not necessarily just about the offer price; in fact, sometimes money is of lower importance relative to other things, such as exciting growth prospects, continued employment for loyal staff or maintenance of the family name. However, the point here is that having a clear idea of what is important to you and the business in a sale will help you to identify the right offer, aid in negotiations and avoid you being blind-sided by an attractive price when there are more important things at stake.
Tax planning – almost as a natural progression from knowing what you want from the sale, it is also important to ensure you are in the best possible position from a tax perspective before sale and that you also understand the tax implications of different deal structures (e.g., assets vs share deals). If you haven’t sought advice from a tax advisor, it is recommended that you do so as there may be an opportunity to improve the tax position. They can ensure that consideration has been given to the tax implications in the sale. Any required clearances with HMRC are factored into the sale process to avoid any unnecessary hold-ups.
Are you ready to go through the process? – This may seem like an obvious question. Still, particularly in situations where you are the party being approached to sell, it can often be tempting to get swept up in considering the offer and finding out more detail before considering whether the business and you as owners are ready to enter into the process. The sales process can be lengthy, and for a prolonged period of time, both you, your fellow stakeholders and the business are under the microscope. Therefore, it is important first to consider whether you are mentally prepared to undertake the process and, secondly, if the business is in the best position to sustain detailed examination. For example, are all your records, processes and procedures up to date? Do you have a relevant and up to date financial forecast? Are there any skeletons in the closet, e.g., outstanding disputes or litigation? The level of detail an acquirer will require to complete due diligence is more than owners typically use to manage their business. Ensure that you are on the front foot when the acquirer and their advisors scratch below the surface. This is particularly relevant if you are in talks with US acquirers as their due diligence procedures are notoriously detailed.
Think twice, strike once – Building further on the point above; it is vital to ensure that the information you share with prospective buyers shows the business in the best light, is correct, accurate and up to date. Once a buyer sees it, it’s difficult for them to un-see it. Sending information that is out of date, incorrect, or overly negative or optimistic could be detrimental to the continued interest of the purchaser or your negotiating position. It is also wise to be thorough and provide both numbers and words. When preparing information, always consider:
a. What message do you want to convey? Sharing information during due diligence is still part of the sales ‘pitch’; therefore, ensure that everything you share fits into the story, e.g., if you are sharing financial information and forecasts, it can be helpful to provide supporting commentary that explains any unusual items, or assumptions made so that they can follow the narrative told by the numbers.
b. Don’t assume the purchaser has pre-existing knowledge of your business or that what is publically available is suitable.
Are they right for you? – You will spend a lot of time providing information to the potential buyer. Before you engage too deeply, you need to confirm:
a. Does their offer meet our objectives for a deal?
b. Do they have the capability and resources to deliver it?
c. Does their business fit, strategically, with ours?
d. Is the person we are speaking to the key decision-makers, or have they got delegated responsibility to deliver the deal?
This list is by no means exhaustive, and the last question may seem strange, but we have seen several situations where division heads have not got the group’s authority to act.
We also suggest that you speak with your financial advisors, who will be able to assess the approach to appropriately support and advise on how to proceed.
A recent example
We recently advised Cambridgeshire-based Comtec on their sale to French-based Euro Techno Com Group (ETC Group).
Founded in 1978, Comtec Group is one of the UK’s largest value-added distributors of telecom and IP equipment to both the carrier and enterprise markets, and a specialist in supply chain management for telecoms operators and systems vendors. It serves most major telecom operators and installers in the UK and the Middle East, including BT, Virgin Media, Sky and Ooredoo. Since its inception, the company has experienced continuous growth and has scaled through targeted acquisitions and sustained international growth. Comtec has seven offices across the UK, Oman, Qatar, the UAE and Hong Kong.
Since completing a management buy-out, the business has continued to develop. Revenues have more than doubled over the past five years to over £70m.
The acquirer, ETC Group, has operations across six countries in Europe and North America. It is regarded as a global leader in product design, procurement, supply chain management and the distribution of passive and active telecom equipment and materials with best-in-class technical and logistics solutions for communications service providers’ network deployment and maintenance. Its 2,000+ customers include major American and European cable operators and telecoms service providers, as well as large and small independent installers and sub-contractors.
The transaction provides ETC Group, which Carlyle acquired last year, a strong foothold in the fast-growing UK market. All major telecom operators and alternative networks have started a long-term deployment phase of fibre across the country to support the ever-increasing demand for high-speed connectivity. The acquisition also allows ETC Group to serve the growing IP infrastructure market for enterprise customers and further expand its offerings and expertise in data centre supply and maintenance.
You can read more detail in our press release here.
This article was written by Phil Sharpe, Corporate Finance Partner at Price Bailey. If you have been approached and would like to speak to our specialist Corporate Finance team, please contact us on the form below.
We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide, and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.
You can view this article in its original setting with Price BaileyHere
The UK is on course to leave the EU single market at the end of the year, which means the end of free movement of people too. Despite this, the Government has stated its commitment to protecting the rights of EU nationals and their family members who want to remain in the UK after Brexit.
It is in businesses best interests to take proactive steps in advance to ensure their employees retain the right to work in the UK and avoid business interruption.
EU Settlement Scheme
The EU Settlement Scheme (Scheme) has been set up to create a mechanism to support employees and requires UK based EU nationals to register to preserve their rights under UK law. This includes the rights to work, pensions, and healthcare.
It is vital that businesses assess whether, and to what extent, their workforce will be affected by the Scheme. EU, EEA or Swiss citizens and their family members who are living in the UK before 1 January 2021 need to apply to the EU Settlement Scheme to continue living in the UK after 30 June 2021.
How to assist your EU national employees
Make sure your workforce understands the steps they are required to take to lawfully be entitled to remain in the UK. This will depend on how long the employee has lived in the UK at the time they register.
Settled Status
EU nationals residing in the UK on or before 31 December 2020 with five years of continuous residence in the UK can apply for a new ‘settled status’ which will be similar to ‘indefinite leave to remain’ under current UK immigration law as it applies to non-EU nationals.
Pre-Settled Status
EU nationals residing in the UK on or before 31 December 2020 with less than five years of continuous residence in the UK must apply for a ‘pre-settled status’ to remain in the UK after 31 December 2020.
Non-EU Family Members
Non-EU family members of EU nationals who are residing in the UK before 31 December 2020 must apply for ‘pre-settled status’ or ‘settled status’ to protect their continuing rights to live in the UK after ‘exit’ day. It is also possible to bring non-EU family members living abroad to the UK provided that the relationship exists on 31 December 2020 and continues to exist when applying.
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Most young businesses will want or need to raise their prices at some point, but what’s the best way to go about it?
If you’re selling the same thing to the same clients at the same price for two years in a row, you’re not growing your business. In fact, says business development strategist Charlie Whyman, you could actually be shrinking your business.
Among the most compelling reasons for hiking up your prices is rising costs – if you suddenly have to dig deeper to provide your product or service, it might seem logical that your customers should help bear the brunt of that.
But there’s more to raising prices than just making sure your bottom line doesn’t diminish – sometimes you may wish to push them up because you feel what you offer is worth it. Maybe perception of your brand has improved, or you’re offering a better service than you used to. In many industries, Whyman says, we’re moving towards value-driven pricing.
More of which in a moment, but for a straightforward retail business, what’s the best way to put up prices without making customers flee to your nearest competitor?
The answer, says Niamh Barker, founder and MD of the Travelwrap Company – whose luxurious cashmere wraps have been warming shoulders since 2007 – is to first ensure customers understand and appreciate why, exactly, your brand and its products are special.
Because it’s worth it
“Our classic collection has had a price increase of around 13% over the last three to four years,” says Barker, “and I was certainly apprehensive that increasing prices could impact sales. We don’t take increases lightly, but at the end of the day we need to ensure we can cover the cost of production and raw materials as well as staff and so on.”
“Be transparent about why you’re increasing costs. What has led to the increase? Always honour existing agreements and possibly offer a ‘staggered’ introduction to new prices to sweeten things”
Sean Mallon, CEO and founder, Bizdaq
Much is made on the company’s website and in promotional material of the fact that Travelwrap’s products are created in the UK, are high quality and can’t be bought elsewhere. This, in part, has resulted in customers accepting what has amounted to some fairly modest price rises. In fact, sales have increased by about 50% – proof, perhaps, that many customers understand small rises in price are inevitable, and that many will readily accept them if they like the product.
How to raise prices
Andrew Firth, CEO and founder of Leeds-based digital agency Ascensor, suggests waiting until after the January sales. “It means you get to ‘give’ a bit before making the change,” he explains.
Frances Day, marketing expert and founder of business coaching organisation In The Company of Leaders, suggests adding lots of extra value. “This is the secret to successfully raising your price. The price becomes almost irrelevant when the client is delighted with the outcome.”
Meanwhile, Sean Mallon, CEO and founder of business-selling platform Bizdaq, argues the case for clarity. “Be transparent about why you’re increasing costs,” he says. “What has led to the increase? Always honour existing agreements and possibly offer a ‘staggered’ introduction to new prices to sweeten things.”
Other tactics include adding little extras to soften the deal, and – a little left field – keeping the same price but reducing the size or scope of the product or service you offer.
Ultimately, says Whyman, there’s a market for what you’re selling whatever the price – so long as it’s packaged and targeted correctly. “Think of personal trainers,” she says. “They mostly offer the same sort of service, and if you’re offering your skills to the average gym-goer, then about £30 an hour is probably the most you can charge. But if you’re targeting high-profile footballers or busy CEOs, the sky’s the limit.”
Know your product, believe in your brand, and have confidence in your pricing. “You do need to increase what you’re charging your customers from time to time, and, yes, you will lose some of them,” says Whyman. “But I think that’s OK, especially if you’re able to tell the ones that stay with you exactly why you’re doing it and can explain the value they’re getting out of what you offer.”
The price is right
Erica Wolfe-Murray, business coach, author, and founder of creative agency Lola Media, shares her tips on how to get your pricing right.
1. Know the cost of opening your doors each morning
It’s vital to know how much your overheads cost you each day. This is the very minimum your business needs to recover every single day to ensure you stay afloat, and your pricing needs to reflect this.
2. Understand how to set your pricing
The price of every item or service you sell must cover the cost of its raw materials, your time producing it, a proportion of your overheads, plus a margin of profit for your business.
3. Offer a range of prices
If you sell a range of products or services, ensure you have a pricing range, from cheaper through to more expensive. When offered a choice, most customers will generally select the mid-priced item, perceiving better value than the highest or lowest.
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