Pathways to growth and success

However, unless your business is in the fortunate position of having substantial cash reserves, you are likely to need recourse to outside sources of finance to fund that growth, whether it be due to increased working capital, capital expenditure or the cost of an acquisition to bring about that growth.

Bank funding has traditionally been the main route to additional finance and it remains a popular way for companies to get access to the capital they require as it remains a relatively inexpensive route.

Banks remain keen to lend to businesses with strong management, good ideas and a proven track record, but for really significant investments often some form of equity investment is the only way forward.

Private equity funding is arguably more high profile and more commonplace than it has ever been and is helping an ever-growing list of businesses to achieve their aspirations.

Last year saw an increase in such deals in the North East and just recently NorthEdge have made a significant investment in Teesside’s Ramsdens Financial.

At Ward Hadaway, we have advised on a number of significant private equity investments in North East companies in recent times, including one in a company in this year’s Fastest 50 – Express Engineering.

We advised the Gateshead-based precision manufacturing company on an investment by LDC in a transaction which also included additional funding from Express’ long-term bankers, Lloyds Bank.

Express Engineering is using the funding to continue to expand its business and to capitalise on growth in the international oil and gas sector.

On a smaller scale, we have advised on over 60 investments from the Finance for Business North East Fund, the £125m fund which provides debt and equity investments to small and medium-sized businesses across the region.

The Fund has helped scores of companies either starting out or looking to grow in the region in sectors ranging from digital media to manufacturing.

In addition to private equity, the stock market has enjoyed something of a resurgence over the past year with more companies deciding to take the plunge and float their business on the London Stock Exchange.

Ward Hadaway advised on the most recent flotation by a North East company, providing legal advice to Applied Graphene Materials on its Initial Public Offering on the Alternative Investment Market of the London Stock Exchange and £11m fund raising.

Whilst becoming a listed company does bring new responsibilities to a business when it comes to aspects such as reporting financial figures, it does heighten profile and allows a business to raise further capital via the issuing of new shares.

Often the raising of finance enables an acquisition strategy to be implemented as well as providing some return for the original shareholders.

Acquisitions are tricky things both during the transaction but more importantly afterwards to unlock the benefit fully.

It is crucial to get the right professional advice to ensure that you know exactly what you are buying, what liabilities you are taking on, what actions you need to take on issues such as employees, pensions and property and to check there are no nasty surprises awaiting you once the business is in your hands.

At Ward Hadaway, we have advised on acquisitions in a plethora of different sectors and industries from manufacturing, business services and IT to telecoms, printing, media and recruitment, always bringing that experience to bear whenever our expertise is called upon.

We have also helped many management teams to fulfil their ambitions of owning the company which they run, advising on a wide range of management buy-outs.

The fact that we also regularly advise private equity firms and debt funders looking to help finance such deals and we have experience of advising sellers means that we are able to provide sensible, rounded advice to whichever party we are advising as we have a first hand knowledge of the needs and issues of all parties involved.

For those who feel they may have come to the end of their company’s growth journey – or who want to start afresh in a new field – selling their business is one of the most difficult and important decisions which they have to make.

In recent years, many company sales in the North East have involved international buyers – at Ward Hadaway we have advised on a number of these including the sales of Hardy & Greys and Monitor Coatings.

Widening the net of potential buyers offers the potential of greater returns for any seller, but this can add on other dimensions as often overseas legal approaches are not the same as in the UK.

Having acted on numerous cross-border transactions in addition to those mentioned above, we can help sellers understand these differences and deal with them to their benefit.

Martin Hulls
Partner, Head of Corporate

* For more information issues raised by this article, or on any other aspect of corporate finance, please contact Martin Hulls.