Funding Growth & Acquisitions Debbie Clarke Partner, Chantrey Vellacott DFK

Contents of presentation  Funding solutions o Options available o Current market trends  Acquisition vs organic growth  Valuation considerations  Due diligence dos

Funding Solutions – Who is writing the cheque? Funding Solutions Bank Debt PE / VC Private Bond Public Equity

 High street lenders  Alternative lenders Funding Solutions – Bank Debt

Funding Solutions – Private Bonds  Private companies raising debt from customers and supporters has become more popular

Funding Solutions – Private Equity / Venture Capital  PE / VC funds have o invested over £40bn in last five years o backed over 3,800 companies o employ over 500,000 people  More funds available with 272 funds raising money in 2013  But entry and exit multiples are steady  Exit numbers are down 20%

Funding Solutions – Public Equity  £363m New Money raised on AIM so far in 2013 compared to £1,000m in the full year 2003

Organic vs Acquisitive Growth  Strategic plans need full buy in  Growth opportunity costs need to be carefully considered o Monetary cost o Time cost  Acquisitions can create value  Can your business afford to lose an acquisition opportunity to a competitor?

Valuation Considerations  Maintainability of profits  Security of clients / contracts  Reliance on key staff  Sector USP  Contingent liabilities  Normalised working capital

Due Diligence  Drive through Acquisition Strategy  Scope work  Financial  Legal  Commercial  IP  Roles and Responsibilities  Conclusions will aide  Final purchase consideration  Warranties & indemnities

Due Diligence  Issues to look out for are: – Company info – Title to assets – Systems and controls – Material contracts – HR – Property – Compliance – Litigation

Conclusions  There are many funding solutions in the market  Plan your growth strategy carefully  When looking at acquisition growth consider the value of any targets as well aggregate value for your business post acquisition  When making acquisitions due diligence preparation is key  Regularly review your funding needs

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