FINANCIAL SERVICES SECTOR AIMS FOR CULTURAL CHANGE P-42 HOW YOUTUBE IS CASHING IN ON ITS WEIRDEST AND WILDEST COMMUNITIES.. P-46 IS APPLE HEADING INTO A “WHITE KNUCKLE PERIOD?” P-48 PRESIDENT OF BOSCH UK, DR. STEFFEN HOFFMANN CHATS BIG TECHNOLOGY DEVELOPMENTS IN THE AUTOMOTIVE INDUSTRY P-54 AVONDALE ACHIEVES STRATEGIC VALUES FAR BEYOND FINANCIAL PREDICTIONS P-78
CyberspaCe 2025 Today’s deCisions, Tomorrow’s Terrain
Authors David Burt Aaron Kleiner J. Paul Nicholas Kevin Sullivan
N Avig AtiNg the Fut ur e oF Cyberse Curit y P ol iC y
Gamechangers Gamechangers 2
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ANDY KHAWAJA, CEO & FOUNDER OF ALLIED WALLET CASHLESS TRANSACTING AND THEIR “BIG IDEA”
78 WORLD VIEW 38.
STRIVING FOR PERFECTION MAY DAMAGE YOUR CHANCES AT SUCCESS
CAN SME’S DO MORE TO PROTECT THEMSELVES AGAINST LATE PAYMENT?
FINANCIAL SERVICES SECTOR AIMS FOR CULTURAL CHANGE
M&A: PAUSE FOR BREATH OR PLATEAU?
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The interviews in this publication may contain certain forward looking statements with respect to the financial condition, results of operations of the businesses profiled. These statements and forec because they relate to events and depend upon circumstances that will occur in the future. There are a number of factors which could cause actual results or developments to differ materially from th forward looking statements and forecasts. The statements may have been made with reference to forecast price changes, economic conditions and the current regulatory environment. Nothing in th construed as a profit forecast.
VOSKRESENSK MINERAL FERTILIZERS COMPANY LAUNCHES THE PRODUCTION OF WATER-SOLUBLE FERTILIZERS
AIRLINES NEED TO MOVE AWAY FROM TRADITIONAL RECRUITMENT TO TACKLE THE PILOT SHORTAGE
Voskresensk Mineral Fertilizers Company switched to producing water-soluble fertilizers on an industrial scale.
A leading aviation resourcing consultancy is spearheading a shake-up of the traditional method of recruitment, by urging airlines to adopt a longer term strategy when it comes to hiring rather than the typical ‘quick fix’ reactive approach.
Implementation of this major investment project started back in 2011. Approximately 500 million RUR were allocated for this purpose. As a result, developers came up with a unique technological scheme for the production of water-soluble MAP (ammonium phosphate fertilizer) from wet-process phosphoric acid. The scheme is unparalleled anywhere in the world. Crystallization occurs continuously over a single stage, which allows for the manufacture of a product of the same level as that of products manufactured by well-known global producers (such as Prayon and ICL). What’s more, in terms of such parameters as turbidity and toxicity (content of toxic constituents), the products manufactured by Voskresensk Mineral Fertilizers Company are absolutely unrivalled. In 2015, the daily output of MAP reached its all-time high of 85 tons per day. At the same time, a technique for blending fertilizers on the basis of water-soluble MAP was established and pilot batches of NPK 19:19:19 and NPK 13:40:13 blends were produced. These high-margin fertilizers were made on the basis of products manufactured within the URALCHEM group. A relevant formula for the blend was created and testing was conducted in order to select water-soluble anti-clodding conditioner. A fertilizer-blending unit was also assembled and installed, and new brands were registered. Relevant plans have been worked out and confirmed at various levels. In particular, it is planned to switch to large-scale production this year and reach an output almost twice as high as the current one – a production projection of up to 50 tons of fertilizers per year. Solar is an environmentally friendly, new-generation product. It is a mix of highly effective solutions for the problem of mineral nutrition. This mix is specially designed for protected ground, fertigation systems, and foliar fertilizing applied to field crops.
AeroProfessional, a specialist consultancy in international aviation resourcing and HR, says that airlines must see recruitment beyond filling vacancies in order to grow in such a competitive sector, and attract the best candidates. Sam Sprules, a director at AeroProfessional, explains: “Recruitment is perhaps one of the most painful processes for an airline. They get inundated with a huge number of CVs and the actual filtering process - unlike any other sector – can take months, with rigorous and costly training to find the right candidate. So it’s understandable that many airlines won’t look into resourcing until they really need to. “However, the downtime between somebody leaving their post, an airline finding a suitable replacement and
then getting them up to speed can have a negative knock-on effect on many other areas of the business.” As well as providing cabin crew and onairport staff, AeroProfessional places pilots with airlines across the globe. They recently published a report on the pilot skills shortage, taking in the views of over 700 pilots and many international airlines. The report further reinforced the importance of airlines to be allocating time and budgeting for recruitment throughout the year, as the best pilots are being snapped up by proactive carriers. Sam concludes: “While we’re still on hand to support airlines that have immediate vacancies to fill, we are increasingly partnering with carriers and assessing their overall resourcing needs. We advise on staff structures, if roles can be combined, and potential future gaps. Having placed 1,500 candidates with over 160 aviation companies, we can spot the trends, foresee market changes and advise airlines accordingly. The proactive airlines have embraced this strategy and got ahead of the race, and we’re urging other airlines to do the same to stay in the game.” AeroProfessional is well placed to provide a longer term strategy, as many of its team have either worked as pilots or at airports, while the leadership team has over 50 years’ experience working with airlines.
GLOBAL CURRENCY BUSINESS CENTTRIP TO FOCUS ON THE PRIVATE JET SECTOR Global currency business Centtrip announced plans to make the UK and wider European private jet market a key focus in 2016, providing it with access to the live currency market and real rates of exchange. Given the size of the private jet sector and its reliance on the foreign exchange market, the company is aiming to help improve the way private jet owners and operators buy their foreign currency. Its research reveals there are now around 594 business aircrafts in the UK – from pistons to business jet airliners - and that the market is growing. Indeed, the number of business aircraft delivered to the UK in 2014 was 28.6% higher than in 2010. There are around 4,277 business aircraft across Europe. Centtrip is a Global Currency Account with a multi-currency prepaid MasterCard® card that launched in 2015 targeting affluent individuals and companies with a commitment to international bank payments and travel expenditure. Centtrip provides customers with access to the live market to buy currency with 0% foreign exchange rates, free of spread and commission, through one multi-currency account. The prepaid MasterCard card can hold 14 currencies simultaneously and comes with significantly higher balances and spend limits compared to £5,000 or £6,000 for most prepaid currency cards. In addition to spread free exchange rates, there is no charge for point-of-sale transactions in the UK or abroad and a transparent fixed international ATM fee of £1.60. The Centtrip card also offers the convenience and confidence of the MasterCard brand accepted at over 35 million locations and 2.1 million ATMs worldwide displaying the MasterCard Acceptance Mark. Centtrip now has over 5,000 clients across sectors including luxury yachting,
professional services and the music and sports industries. The vast majority of industries Centtrip works with face similar complex and expensive FX challenges to those in the private jet sector. For example, luxury yachting has developed strong FX strategies for managing umbrella operations with a number of vessels around the world; the costs incurred by crew members travelling overseas, and fuel and maintenance payments and expenses. With a dedicated account manager, the Centtrip Global Currency Account provides clients with one central platform to set up and manage multiple cost centres suited to business needs. One centralised account also benefits from reduced costs associated with using multiple bank accounts. Tony North, Co-Founder and Managing Director, Centtrip said: “We have enjoyed very strong growth since our launch, and to help build on this, we are excited about expanding into private aviation. It is a huge industry with over 39,000 business jet flights into Europe every month. The foreign exchange challenges facing aviation companies in Europe, and owners of private jets, are huge and we believe we will help save them a fortune by offering live rates with no spreads through one central Global Currency Account to manage numerous aircraft.” ”We currently do a lot of work in the luxury yachting industry, and believe there are synergies with this and the corporate jet space. For example, the FX strategies that are in place to manage umbrella operations with a number of vessels around the world; the costs incurred by crew members travelling overseas, and fuel and maintenance payments and expenses, could all be managed and mitigated against by the private jet sector. For these reasons, the private aviation market is a real area of focus for us in 2016. “ Centtrip fees are fixed and transparent with clients paying a maximum 0.5% of the value of funds loaded to their account. Thereafter, they can send payments in all major currencies and most exotic currencies direct from their Centtrip or bank account and control expenses using the prepaid MasterCard cards with real time transactions and balances.
BARCLAYS HELPS SMES ACCESS ‘BIG DATA’ TO AID GROWTH o o o
Barclays brings businesses local insight with the launch of SmartBusiness Service will bring UK SMEs data to life across transactions and payments including consumer habits Launched as research* reveals over half (56%) of SMEs don’t utilise their data frequently, missing out on opportunities for growth
Barclays is launching a new online data insights service for its small and medium business customers next month. SmartBusiness will analyse and bring transaction data to life and will allow business owners to compare against similar businesses in their region. The solution, the first of its kind, will bring the power of a market research department to time-starved small business owners, for a low monthly cost. The service will be available in May 2016 to over 500,000 business customers through Barclays online banking. It will show key trends around business inflows and outflows and show how money is paid in from cash, debit cards and cheques, in addition to an average spend by customer.
ment’s plans to promote digital business solutions around data.” The tool will analyse business banking and card payment transactions to present data and intelligent insights to help customers manage and grow their business, identify opportunities and take informed actions and decisions for their business. Using anonymised sector data, businesses will be able to compare against similar businesses in their area and track how they are performing over time. Users with a Barclaycard terminal will also be able to view customer insights such as behaviours, audiences, and spending patterns. Its design will help businesses design loyalty or reward schemes planning, by having an easy to read summary of customer spend and visits. The service will be £4.95 per month plus VAT, and Barclays believes SMEs will save much-valued time with the easy to read, relevant and intelligent insights about their business and customers. The poll went on to find that while there are a high number of businesses not utilising or understanding their data, many identify the value it could have on their business. The top benefits of doing so include growth, cashflow management and understanding customer base.
Latest research reveals that 56% of SMEs rarely or infrequently check their business data with 3% having never looked at it at all. While 44% of UK businesses say they check their data daily or weekly, common frustrations include being occupied by other tasks (33%), not having enough time (22%) and 15% have never even thought to analyse their own data on transactions and customers. Ian Rand, CEO of Barclays Business commented: “For small and medium sized business owners, running a business is a full time job and it can be difficult to find the time to take stock and plan for the future. SmartBusiness will help SMEs and aspiring entrepreneurs to both run their business by understanding their cash flow better; and to grow their business by understanding more about their customers. We want to give small businesses access to affordable market insights that traditionally would be the preserve of larger companies. We are equipping the nations businesses with access to their own data in a form that’s much easier to use, and supporting the govern-
FALL IN NUMBER OF GOVERNMENTBACKED LOANS GRANTED FOR SMES o o
Boost Capital questions Government commitment to EFG scheme as lending to SMEs continues to fall year on year Boost Capital urges Government-backed British Business Bank to quickly progress the long-awaited bank referral scheme to bring much needed finance to SMEs
Following last week’s Budget, Boost Capital questions the Government’s commitment to the Enterprise Finance Guarantee (EFG) scheme as latest figures show that it is not reaching or supporting many businesses, with the number of SMEs receiving finance through the scheme dwindling year on year since 2009, falling to a low in 2015. The EFG, which sees the Government act a guarantor to SME loans, will be extended until at least 2018 following last week’s Budget announcement. However, figures from the British Business Bank show that just 446 companies were granted a loan to a total value of £55.7m in the last quarter of 2015. This compares to 2,030 loans drawn between April and June 2009 – at its peak - at a value of £201.6m, but the statistics show that lending has taken a sharp fall ever since. The EFG scheme sees the Government (through the British Business Bank) act as a partial guarantor on up to 75 per cent of bank loans between £1,000 and £1.2 million made to SMEs who
GLASGOW PROPERTY FIRM SECURES SEVEN FIGURE FUNDING TO SUPPORT GROWTH o o
Greenbelt is focused on expansion across the UK after securing funding from NatWest Scotland NatWest Scotland Corporate Transactions team structure £3.125million senior debt funding package
Glasgow based Greenbelt Holdings Ltd (Greenbelt) has secured a £3.125 million funding package from NatWest Scotland to support their future growth strategy. The funding replaces investment provided by Maven Capital Partners via their Capital for Enterprise fund and will allow Greenbelt to focus on expanding the business across the UK. Greenbelt currently services some 50,000 homes on around 500 developments throughout the UK and is looking to increase this number.
cannot offer any assets as security. Alex Littner, managing director at Boost Capital, comments: “The Budget was positioned with SMEs at its heart yet the Enterprise Finance Guarantee scheme that was designed to serve capitalstarved small businesses cannot be heralded a success when lending continues to fall. “A mere 1,835 enterprises received EFG-backed loans during the whole of last year; when we consider that 99% of Britain’s 5.4 million business are SMEs, the figures continue to prove that the liquidity lost during the 2008 economic downturn is not back to where it was. “While the EFG continued to receive further Government commitment last week despite no evidence it is really delivering what it set out to do, disappointingly absent was the Government’s progression on the bank referral scheme, first announced in 2014 which will ensure banks will share with alternative lenders the details of small business customers they reject for lending. It needs to act more swiftly - a launch date and any further details on how it will actually work is yet to be explained. “Ironically, there are more sources of financial help for SMEs now than ever before, but the Government needs to push schemes like EFG and bank referral scheme to help small businesses locate this much needed capital. Alternative lending has emerged out of the business funding desert of recent years, driven by the urgent need of SMEs for capital.”
Its Greenspace Management arrangement is unique in the UK property management market. Whilst taking ownership of open space land – which can include landscapes, recreational and drainage facilities, roads and lighting – it also enters into a management arrangement with each property that benefits from its management. This means homeowners contribute towards the upkeep of their development. Established in the early 1990s, in anticipation of the demand for new housing, Greenbelt has grown to become the industry leader in providing secure land management solutions for new home developers. It employs a dedicated team made up of expert legal, financial, IT, business, customer management, arboriculture, drainage and recreational facility professionals. A £3.125 million term debt facility has been structured by the NatWest Scotland Corporate Transactions team represented by Ondrej Okeke alongside colleagues in the banking team represented by Alasdair Seftor. Greenbelt Chief Executive Alex Middleton commented: “Greenbelt is in prime position to provide the sustainable land management solutions being sought
after nationwide. Thanks to these new terms agreed with NatWest Scotland, our medium-term funding requirements are now secure. This allows Greenbelt to promote its brand and increase its profile throughout the UK to a wider residential development market through its quality strategy. We very much look forward to enjoying an excellent partnership with NatWest Scotland.” Ondrej Okeke, Director of Corporate Transactions team at NatWest Scotland said: “We are delighted to support the Greenbelt team with funding to assist their expansion plans going forward. They have a highly skilled management team with long established relationships across the house building sector. The term debt facilities allow Greenbelt to refinance existing debt and support their long term growth plans. We are very pleased to welcome Greenbelt as a customer of the bank, and look forward to working with the Management Team and supporting their strategic as well as day to day banking requirements going forward.” Advisors working on the deal include financial facilities provided by NatWest Scotland, due diligence from Mazars, Shoosmiths LLP providing legal advice to the bank and Brodies LLP for the management team and BDO Corporate Finance providing advice to Greenbelt.
GLOBAL M&A ACTIVITY DECLINES IN Q1 2016 AFTER RECORD YEAR IN 2015 o o
M&A volume and value down quarter-on-quarter in all regions, overall PE/VC activity also declines across the board Zephyr reports on M&A and private equity activity in Q1 2016 – access report
Both the volume and value of global mergers and acquisitions (M&A) declined in the first quarter of 2016, compared to Q4 2015, according to information collected by the leading M&A database Zephyr. In all there were 20,040 deals worth a combined USD 861,749 million announced between January and March. In terms of volume this represents a 21 per cent decline on the 25,506 deals announced in the final quarter of 2015, while value fell 52 per cent from USD 1,804,131 million over the same timeframe. A decline was also recorded year-on-year, albeit to a lesser extent. In the first quarter of 2015 there were 24,509 transactions worth a combined USD 1,338,445 million. Lisa Wright (pictured), Zephyr director, commented, “After 2015’s record year for deal making it would have been unrealistic to expect that level of deal activity to have been sustained in Q1 2016. However, it is worth bearing in mind that Q1 deal activity is rarely a record-breaker and frequently not an indicator of the year ahead. In both 2014 and 2015 Q1 was significantly lower than the remaining quarters of the years in terms of aggregate deal values, while volumes also increased in quarters two, three and four of the two years. This, combined with the fact that there were still a number of sizeable transactions announced in Q1, gives some hope that what we are witnessing is more of a ‘slow burn’ start to the year, rather than a sign of things to come in the rest of 2016 and beyond.” Zephyr shows that all world regions included in the report declined in terms of both volume and value quarter-on-quarter. The same is true when compared to the first quarter of 2015, with the exceptions of Asia-Pacific and CEE, both of which increased in terms of private equity investment value on Q1 2015. The largest decline in value quarter-on-quarter came in Western Europe, which slipped 64 per cent from USD 557,671 million to USD 199,958 million. Despite the disappointing results, there were still a number of high-value deals announced during Q1. The quarter’s largest transaction is worth USD 43,000 million and is ChemChina’s acquisition of Swiss agricultural pesticides and fertilisers manufacturer Syngenta through its CNAC Saturn (NL) subsidiary. In all there were seven deals worth more than USD 10,000 million announced during Q1, of which five have US-based targets. Aside from the aforementioned Syngenta deal, the only other one of these deals with a non-US target is worth USD 13,185 million and is Deutsche Boerse’s planned combination with the London Stock Exchange via the HLDCO123 holding company. Meanwhile, the Zephyr database shows private equity dealmaking followed the same pattern in the first three months of 2016 as value hit its lowest ebb since the second quarter of 2012. Quarter-on-quarter PE value declined 57 per cent from USD 234,476 million to USD 100,431 million, while volume dropped 13 per cent from 5,902 to 5,106 over the same timeframe. The decline in PE investment volume worldwide was even more pronounced when compared to the first quarter of 2015, although value decreased at a slower rate over the period; USD 152,373 million was invested across 6,138 million private equity deals worldwide in Q1 2015.
INVOICE FINANCING PROVIDER EXPANDS ASSET BASED LENDING FACILITIES FOR UK SMES FOLLOWING EQUITY COMMITMENT OF £20M FROM SPRING VENTURES Commercial lending heavyweights including the cofounders of Capital One Bank and Centric Commercial Finance buy invoice finance business with the aim of creating an asset based lending businesses for UK SMEs Spring Ventures, a private equity investor specialising in management buyouts of UK companies with strong growth potential, announced that it has backed a group of experienced commercial lending professionals to buy invoice financing provider, IGF Invoice Finance Limited (“IGF”), from Greater London Enterprise(GLE). Spring Ventures will initially invest £9m to fund the acquisition (buy-in management buyout) and provide growth capital. It will commit a further £11m of follow on capital over the next three years and will take a majority stake. The management buyout team includes John Onslow, John Nelson and Jon Hughes who collectively have 60 years experience in the commercial lending sector. Matthew Cooper, co-founder of Capital One Bank and former NEC of AIM listed Inspired Capital, has also been appointed as Chairman. New CEO John Onslow has previously grown and sold two asset based lending businesses including Centric Commercial Finance (sold to Shawbrook in 2014) and Heller Finance (acquired by GE in October 2003). John also served as Chairman of the Asset Based Finance Association. IGF will lend up to £5m to meet the growth aspirations and working capital needs of UK SMEs with revenues up to £100m. The facilities may also be used to support re-financings, mergers and acquisitions, management buy-outs and buy-ins, restructurings, and turnaround situations. IGF currently has a portfolio of c. 200 clients and a loan book of £20m; and supported small businesses with total sales volume of more than £300m in the year to March 2015. Established in 1997, the company is headquartered in Tonbridge, Kent and currently employs 38 people. Following the investment, the business will hire additional staff and expand its national presence across the UK.
Matthew Cooper, new Chairman of IGF, commented: “Against a backdrop of continued demand for SME funding, this is a very exciting opportunity to take a relatively small invoice lending platform and grow it into an asset based lending business of significant scale. Aside from bank lending, there are still very limited credit facilities available for smaller businesses. Our model provides a solid way to deliver flexible forms of funding to SMEs and I have every confidence that we will increase the size of our loan book from £20m to £300m + in three years.” John Onslow, new CEO of IGF, commented: “In Spring Ventures, we have found an investor that will give us the financial firepower to take IGF into exciting new areas as well as increase our national presence. The asset based lending market is growing fast. It is still dominated by the high street banks who would in general rather invest in larger, lower risk opportunities and this in turn offers enormous potential to smaller more flexible providers like IGF to fill a gap. With 5 million SMEs in the UK currently employing some 15 million people and accounting for 50% of the economy, there is a very significant funding gap to be filled.” John Hudson, Managing Partner at Spring Ventures, who joins the IGF board commented: “This deal gives us an attractive opportunity to back what we believe is the strongest team in the asset based lending sector. Due to the complexity of the business, few operators have the credibility to provide a full range of asset based loans at this end of the market. The IGF team have proven experience of building successful lending businesses and we very much look forward to working with them to create a major new provider of asset based lending to SMEs.” According to the bank of England, the UK SME lending sector is estimated at £175bn of which £20bn relates to invoice finance and other types of asset based finance. Although post-recession SME lending by banks has declined by approximately 25% from its peak, the asset finance sector has grown strongly at a rate of c. 6% p.a. over the last 5 years and now has total funds in use of approximately £20bn. In total c, 45,000 businesses in the UK and Ireland used asset based lending in 2015 (Asset Based Finance Association).
LDF AND THE BRITISH BUSINESS BANK AGREE £51 MILLION FACILITY TO INCREASE ASSET FINANCE FOR SMALL BUSINESSES Transaction is second of British Business Bank’s new ENABLE Funding programme The European Investment Fund will guarantee 50% of the facility The British Business Bank is pleased to announce that it has agreed to provide a £51m facility to LDF, a non-bank finance provider, to fund a portfolio of newly originated small business asset finance receivables. The transaction, which is 50% guaranteed by the European Investment Fund, is the second of the British Business Bank’s ENABLE Funding programme, which aims to increase significantly the supply of leasing and asset finance to smaller businesses in the UK. It follows a £100m facility provided to Hitachi Capital (UK) Limited in October 2015. Peter Alderson, Managing Director, LDF, said: “LDF are delighted to be working with the British Business Bank on this exciting initiative. Access to finance, particularly for asset procurement, remains a critical barrier to success for many smaller businesses and making this more readily available is something that we are fully behind. “We already deliver significant support to this sector, providing over £40m of finance in January alone. With strong ongoing support from our shareholder, Cabot Square Capital, and our recent acquisition of asset finance specialist, First Independent Finance (FIF), we have very ambitious plans for growing our presence in the SME market. The combination of LDF’s scale and stature, teamed with the strong asset finance heritage of FIF, increases both our geographical presence and our potential client base. With 5000+ clients, our special expertise lies in finance for professional firms
and corporate SMEs. We believe that this facility will enable us to further grow that base and also provide a higher level of support, to a significant proportion of that client base.” Reinald de Monchy, Managing Director, Wholesale Solutions at the British Business Bank, said: “This second transaction in the ENABLE Funding programme will further boost the availability of asset finance for businesses across the UK. We are particularly pleased to be able to be working with LDF, which is a high-growth lender, to help it expand its funding programme, which has already supported so many businesses across the UK. “We now have provided two facilities totalling £151 million and we anticipate further transactions throughout 2016. Our intention remains for these facilities to be refinanced through the capital markets once we achieve a required critical mass of circa £300 million or more.” Pier Luigi Gilibert, EIF Chief Executive, said: “We are delighted to be partnering with the British Business Bank again and to be guaranteeing this innovative finance facility for the benefit of SMEs. Through the ENABLE Funding programme we can help UK non-bank finance providers to offer additional financing solutions for SMEs and small MidCaps. This EIF guarantee now brings the total finance available under this programme to over £150 million which is a substantial boost for UK entrepreneurs. We are very pleased to support both the British Business Bank and LDF in their financing campaign for businesses.” The ENABLE Funding programme, which has been developed as an aggregation vehicle, will allow LDF to expand substantially its provision of asset finance to smaller businesses. In order to build the critical mass necessary to refinance the assets, the programme will be announcing similar agreements with other funders during 2016. Facilities will range from around £25m to £150m, and the programme will aim to refinance the warehouse facilities when receivables total approximately £300m or more. This refinancing will allow institutional investors access to a large and highly diversified pool of SME debt.
RESPONSIBLE FINANCE SUMMIT BUILDS BRIDGES BETWEEN RESPONSIBLE FINANCE PLAYERS IN EMERGING AND DEVELOPED MARKETS Groundbreaking Summit hosted by Bank Negara Malaysia, organised by RFI Foundation and co-organised by Middle East Global Advisors launched under the theme “Unlocking Finance, Expanding Impact” The Responsible Finance Summit that concluded in March 2016, brought together representatives of the Islamic finance and traditional responsible finance sectors to build alliances in support of the expansion of responsible finance across emerging markets. With participation by financial sector leaders including Governor of Bank Negara Malaysia, the Emir of Kano and the Founder of the UN Global Compact, as well as high profile delegates from Canada, Ghana, Malaysia, Seychelles, Libya, UAE, Nigeria, USA, Russia, the Summit brought together diverse perspectives to identify ways for the financial sector to support equitable, inclusive and sustainable economic growth. Over two days, the Summit played host to critical discussions around strategies to increase the footprint of responsible finance in emerging markets, facilitate knowledge sharing and cooperation between Islamic finance and traditional responsible finance, and integrate responsible finance within a wider global financial markets. Blake Goud, CEO of RFI Foundation, which organized the Summit, commented: “Islamic finance has grown strongly in emerging markets which can benefit immeasurably from further development of values-based responsible finance. By connecting Islamic finance with traditional responsible finance which is beginning its growth into emerging market, the Summit will support sharing of approaches to facilitate future growth of responsible finance.” Ehsan Abbas, Chairman of Middle East Global Advisors, the co-organiser of the Summit, stressed on the importance of enhancing the scale and impact of responsible finance: “The Summit highlighted the universal values that are shared between Islamic finance and traditional responsible finance. It spurred a critical dialogue that was previously lacking, specifically on ways to encourage the expansion of the responsible finance ecosystem into emerging markets and fostering a more inclusive Islamic finance industry.” Hosted by Bank Negara Malaysia, the Summit was organized by RFI Foundation and co-organized by Middle East Global Advisors, two leading institutions spearheading the agenda of identifying Islamic finance within the broader responsible finance universe to capitalize on its unique aspects to make responsible finance more inclusive across the global population.
ULTIMATE FINANCE’S NEW OFFICES MAKE £60M PLEDGE TO SMES TO MARK FIRST ANNIVERSARIES
“They have tried borrowing money through traditional routes but are still finding banks reluctant to lend. We are therefore seeing more SMEs using invoice and asset finance as it enables them to have their invoices paid the next day.
The Glasgow and Leeds offices of Ultimate Finance have committed £30m each, over the next 12 months, to help SMEs in their region which are being held back through lack of funding.
“This is backed up by the latest findings for quarter three by the Asset Based Finance Association. It has calculated that funding to UK and Irish businesses, secured against invoices and other assets, has reached £20 billion for the first time ever; an increase of four per cent on the same time last year.
The pledge follows a successful 12 months for the asset-based lender, which opened both offices at the beginning of last year. Both have grown considerably since then, with fifteen experienced personnel, with expertise in invoice, construction and asset finance, now operating across the Leeds and Glasgow offices. As a result of the ongoing success, additional sales personnel, client managers and support staff, including those with trade finance expertise, are being recruited. Commenting on the £60m pledge, Richard Waldman who heads up the Northern teams, said, “Through our six offices across the UK we are regularly introduced to successful businesses who are frustrated their growth is being hampered by cashflow constraints. “They want to take on new contracts and increase orders with their existing customers, but as they can wait 90 days or more for their invoices to be paid, they don’t have the cash available to do so.
“SMEs are now recognising they have earned the money by providing goods or services, so why can’t they have the money now rather than having to wait months for it. “There are so many successful and growing SMEs which are being held back because of the short-sighted approach of lenders. It is our aim therefore to work closely with companies with a turnover of up to £50m to whom we can provide as much as £5m funding in order to provide a flexible solution to their cashflow problems. “From a standing start a year ago we have ‘hit the ground running’ by building teams in Leeds and Glasgow with unrivalled expertise,” continued Richard. “We quickly entered the market and because we are able to turn deals around quickly we have taken many of our competitors by surprise. This has resulted in us comfortably beating all the targets each office was set for its first year.”
GUERNSEY FIRMS ADVISE ON EUROPE’S LARGEST MEDTECH FUND Guernsey firms Carey Olsen and Ipes have assisted Endeavour Vision on the fundraising of Endeavour Medtech Growth LP, which closed at its hard cap of 250 million having been oversubscribed. This makes it the largest dedicated medtech fund in Europe and one of the largest pure medtech funds worldwide. Advised by healthcare and technology investor Endeavour Vision Ltd, the specialist fund is targeting European and US companies in the medical device and digital health sectors with products that have gained regulatory approval and are already generating commercial traction. Endeavour Vision Ltd is an internationallyrecognised investor in the healthcare and technology sectors. The team includes successful investment professionals and world-class industry veterans and has executed more than 65 investments within its areas of focus. The Carey Olsen team was led by partner David Crosland and included senior associates Jan Johannsson and Gemma Campbell. Advocate Crosland said: “Fintech often grabs the headlines but medtech is a huge and growing market that is offering exciting opportunities for investors. We were very pleased to support Endeavour Vision on this highly successful fundraise.” The Ipes team was led by Andrew Whittaker and James Nicolle. Andrew Whittaker said: “Endeavour’s continued confidence in Guernsey as a jurisdiction for their fund for the third time is a positive step forward. Using the National Private Placement Regime (NPPR) worked well and made their fund set up a smooth process. Ipes will be providing Endeavour with Administration, FATCA and AIFMD reporting services.
CONSTRUCTION TO BEGIN ON EAST AFRICA’S LARGEST SOLAR PROJECT $19 million Uganda solar plant will power 40,000 homes and businesses Access Energy Group and EREN RE, developers, owners and operators of power projects in emerging markets, announced that construction of the largest
solar project in East Africa will begin soon. The 10 megawatt (MW), US$19 million solar photovoltaic project in Uganda is expected to be operational and connected to the national grid in July 2016, providing clean, low-carbon, sustainable electricity to 40,000 homes and businesses. It is also the largest privately-funded solar power plant in Sub-Saharan Africa, outside of South Africa. Access Uganda Solar Limited, a partnership between Access Infra Africa and EREN RE, will build the solar plant in the town of Soroti, 300 kilometres northeast of the Ugandan capital Kampala. Spain’s TSK Group has been awarded the engineering, procurement and construction (EPC) contract and will sub-contract parts of the work to local firms. Local labour is being hired for the construction phase and the developers will also recruit and train engineers to operate the plant. The location was chosen due to the region’s low power generation capacity and the need to reduce transmission losses. The first grid-connected solar plant in Uganda, Soroti will make a significant contribution to increasing electrification rates in the region, which enjoys some of the highest levels of solar resources in the country. In addition, with a design life of 30 years, the plant has the capacity to expand as its sub-station is able to handle a further 20MW of solar energy. Current power generation in the region is intermittent, especially during the summer months, with extensive load shedding of up to four hours a day. Only homes and businesses in the town of Soroti itself have access to the grid but more than 80 percent in the region have none. This has impeded economic development in the area and also has an impact on the quality of life. For example, the prevailing sources of energy for domestic needs such as cooking are wood and charcoal, which have associated environmental and health issues that have been well documented. The Soroti project is the first solar power plant successfully developed under the GET FiT Facility, a dedicated support scheme for renewable energy projects managed by Germany’s KfW Development Bank in partnership with the Government of Uganda through the country’s Electricity Regulatory Agency (ERA). The GET FiT solar facility is funded by the European Union Infrastructure Trust Fund, and the programme is also supported by the
governments of Germany, Norway and the United Kingdom. The project was financed by a mix of debt and equity with the senior debt facility being provided by FMO, the Netherlands development bank, and the Emerging Africa Infrastructure Fund (EAIF). The project reached financial close in record time, providing a successful and easily replicable case study of fast-track implementation of a renewable energy generation project conducted by private developers in Africa. Developed jointly by Access and EREN RE, the power plant is the first project of a broader strategic partnership. EREN RE is a shareholder of Access and both companies
DE GAULLE FLEURANCE & ASSOCIÉS PROVIDES ASSISTANCE TO JOHN LAING PLC. IN RELATION TO THEIR COMMERCIAL PARTNERSHIP WITH WKN FOR FUTURE PROJECTS IN FRANCE AND POLAND WKN AG, a leading developer of wind energy farms based in Germany, concluded a framework agreement with John Laing Investments Ltd at the beginning of the year regarding the future acquisition of international wind energy projects: 50MW in France and 40MW in Poland. The investment in France is composed of projects to be launched successively in the next two years. Each purchase agreement will be subject to building and operational approval of the projects. WKN will be responsible for the construction of the projects, and will be commissioned as EPC contractor by John Laing Group plc. John Laing is an international originator, active investor and manager of infrastructure projects. Its business is focused on major transport, social and environmental infrastructure projects awarded under governmental publicprivate partnership (PPP) programs, and renewable energy projects, across a range of international markets including the UK, France, other European countries, Asia Pacific and North America. WKN have planned, installed and operated turnkey wind energy farms since 1990, with a current total of about 1,300 megawatts capacity across the globe.
John Laing was advised by De Gaulle Fleurance & Associés (Sylvie Perrin, Nicolas Chazarain and Gaia Witz) on all the aspects of the investment in the French Projects, and more specifically with respect to the audit of the portfolio, the drafting and negotiation of the Framework Agreement, the acquisition and financing thereof, in coordination with Noerr for the German law aspects of the transaction.… WKN was advised by Norton Rose Fulbright in Munich (Sebastian Frech). Since its inception in 2001, De Gaulle Fleurance & Associés has a strong Mergers & Acquisitions practice, including in the energy sector. De Gaulle Fleurance & Associés’ M&A practice appears every year in all major international rankings (Chambers, Legal 500 and Leaders League).
ORAL CARE SPECIALIST PERIPRODUCTS SOLD TO CONSUMER HEALTHCARE COMPANY VENTURE LIFE GROUP PLC Periproducts Ltd, the oral care product specialist behind the UltraDEX brand, announced its sale to Venture Life Group Plc (subject to its shareholder’s approval), the AIM-listed international consumer healthcare group addressing the self-care needs of the ageing population. Established in 1993, Periproducts develops and distributes the UltraDEX Mouthwash and Toothpaste brands. UltraDEX sets itself apart as an award-winning premium oral care brand by virtue of its emphasis on research and strong ties to networks of dental professionals. In the UK, UltraDEX has achieved significant success and enjoys strong relationships with major retailers such as Boots, Tesco, Sainsbury, Superdrug and Waitrose. The acquisition of Periproducts and integration of its premium range in the medicated mouthwash and toothpaste category will allow Venture Life to achieve its growth ambitions in the oral care market, both in the UK and internationally. Over the last 15 years, the UltraDEX brand has established a strong position in the UK pharmacy channel and will complement Venture Life’s existing oral care portfolio, while benefitting from Venture Life’s network of over 80 distribution partners. In particular, Venture Life’s track record in building a presence in over 40 countries with leading pharmaceutical and health-
care distribution partners will support the international expansion of UltraDEX into new, high-growth markets. The UK oral care market is undergoing significant change despite its maturity. The sector benefits from a number of attractive growth drivers, including shifts in demography with people living longer, government organisations actively promoting self-care due to increasing constraints on public sector healthcare budgets, and lifestyle factors This shifting consumer behaviour coincides with stable growth and the market is forecast to grow to reach £1.2bn by 2019 (Euromonitor). Consumers are increasingly aware of the value of good dental hygiene and gravitate towards premium, science-based brands such as UltraDEX. Cavendish Corporate Finance, which advised the shareholders of Periproducts on the sale, has a wealth of experience in the healthcare sector. Recent high profile transactions include advising on the sale of off-patent pharmaceuticals provider DB Ashbourne Ltd to Ethypharm, the sale of Polar Speed, which specialises in temperature-controlled deliveries to hospitals, to UPS, the sale of C.D.C. Complete tandzorg to G Square and the acquisition of Barbican Dental Care by BUPA. Richard Bernholt, managing director of Periproducts, commented: ‘I am very pleased to have found such a complementary match in Venture Life, a highly successful consumer healthcare group with a reputation for accelerating the growth of the brands it acquires. The resources and expertise of Venture Life will see Periproducts on a trajectory of rapid growth under the guidance of a proven management team, through enhanced marketing opportunities, new product development and, crucially, access to a substantial number of export markets. The Cavendish team were of great assistance throughout the sale process and in particular finding us the most fitting acquirer, helped by their strong networks in healthcare and their understanding of the oral care market.’ Joe Stelzer, managing partner and head of healthcare at Cavendish, which advised Periproducts on the transaction, said: ‘We are delighted to have assisted the shareholders of Periproducts in finding an ideal organisation and management team to drive the expansion of the UltraDEX product range. Periproducts is a first class operator in
the market, recognised in the industry as an innovative and above-all research-led developer of premium products. With ambitious growth plans ahead, the deal with Venture Life stands to accelerate the company’s expansion both domestically and abroad. Following on from the recently announced sale of DB Ashbourne to Ethypharm, the deal marks another strong transaction for Cavendish’s Healthcare team. In particular, our team has established a strong track record in the oral care market with the recent investment of G Square in dental care provider C.D.C. Complete tandzorg and the acquisition of specialist corporate dental business Barbican Dental Care by BUPA.’
AREY OLSEN ADVISES PARK SQUARE CAPITAL ON 1.2 BILLION FUND Park Square Capital Partners has launched its third subordinated debt fund; securing 1.2 billion of investor commitments with advice from Carey Olsen’s investment fund specialists. The fund, Park Square Capital Partners III, will continue the strategy of investing in the debt of high-quality levered companies backed by leading private equity sponsors across Europe and the US. The fund is able to use leverage taking its total investable capital to 1.5 billion. The predecessor fund, Park Square Capital Partners II, which is a 2010 vintage fund, closed at 850 million. Carey Olsen partner Andrew Boyce and senior associate Alex Mauger advised on the Guernsey elements of the final close, including structuring, fund formation, regulation, marketing and launch. Advocate Boyce said: “We have worked on a number of fund launches with Park Square Capital and the firm’s growth is reflective of the market’s appetite for these products. This is one of several large debt fund launches of recent months forming a trend that looks set to continue.” Robin Doumar, managing partner at Park Square Capital, said: “We have received strong support once again from our investors for our latest subordinated debt fund. “The continued retreat from leveraged finance by the banks, coupled with record levels of private equity dry powder, is creating significant demand for private credit in Europe.”
AVONDALE COMPLETE SALE OF QVS ELECTRICAL WHOLESALE TO RYNESS ELECTRICAL Avondale announced the sale of QVS, the well-known electrical products supplier and online retailer to Ryness Electrical. Established in 1994, QVS operates out of 13 retail units across southern UK and provides an on-line same or next day delivery service on a nationwide basis. Over the last 15 years, the business has developed relationships with factories in the Far East and created its own ranges of branded products. There are over 70 staff. As the two founder directors take retirement, the acquisition allows this respected brand as part of a larger Group to add new stock lines, develop the business and increase revenues going forward. The sale was enacted in just two months. Ryness Finance Director, Steve Westbrook said, “Avondale’s introduction and assistance in the acquisition was invaluable and we are proud to take such an established brand into our wider Group with plans to develop, grow and expand the business”. The principle shareholder Peter Brain welcomed the sale to Ryness, adding “This deal recognises the strength of the QVS business. Avondale not only found a buyer at a critical time but held our hand throughout. We feel sure the business will continue to grow from strength to strength and add value to our customers”.
and is expected to close in May. Acquired by Actera in 2010, Mars is the leading cinema operator in Turkey, one of the fastest growing markets for cinema attendance globally. The company operates 83 multiplexes with 736 screens under the “Cinemaximum” brand in 32 provinces across Turkey. Since the acquisition, Mars has significantly grown its network by increasing the number of screens organically and through acquisitions from 218 to 736, established cinema advertising company “Mars Media” and film distribution company “Mars Dagitim” and propelled both businesses to market-leading positions. During the period, the Company achieved eight times revenue growth and eleven times EBITDA growth. Murat Cavusoglu, Co-Founder and Managing Partner of Actera, said: “Mars is a good example of the favorable growth dynamics of an emerging market being enhanced by initiatives such as an effective buy & build strategy, vertical integration and instilment of best practices. CJ CGV has acquired a great company. On behalf of Actera and our partners in the investment, Esas Holding, Muzaffer Yildirim and Menderes Utku, I wish CJ CGV continued success with Mars.” Seo Jung, CEO of CJ CGV, added: “We are very excited to begin our business in Turkey, which we have long viewed as a very attractive market with unlimited growth potential. We are grateful for the opportunity to contribute to the advancement of the Turkish film industry
ACTERA GROUP AND ADVENT INTERNATIONAL ESAS HOLDING AGREE AGREES TO SELL TINSA TO SALE OF 100% OF MARS CINVEN CINEMA GROUP, TURKEY’S LEADING CINEMA CHAIN Advent International, one of the largest TO CJ CGV and most experienced global private equity Actera Group (“Actera”) and Esas Holding (“Esas”) has announced that they have agreed the sale of Mars Cinema Group (“Mars” or “the Company”), the leading cinema operator in Turkey, to CJ CGV for an enterprise value of US$800 million. Alongside Actera and Esas, the minority shareholders, Muzaffer Yildirim and Menderes Utku, will also sell their shares as part of the transaction. The transaction is subject to standard regulatory approvals
investors, announced that it has agreed to sell its investment in Tinsa, a leading provider of property valuation, analysis and real estate advisory services, to Cinven. The value of the transaction has not been disclosed. Tinsa, established in 1985 and headquartered in Madrid, Spain, provides appraisals for commercial and residential properties to banks, corporates (including real estate investment firms and local authorities) and individuals.
Advent acquired Tinsa in November 2010 from the company’s original shareholders made up of 35 Spanish savings banks along with the Spanish Confederation of Savings Banks (CECA). With Advent’s support, Tinsa has become the largest real estate appraisal firm in Spain and Latin America. It now operates in over 25 countries worldwide, in particular, Latin America with offices in Argentina, Chile, Peru, Mexico and Colombia, as well as Portugal. Tinsa has been leading the market in the development of more accurate and timeefficient proprietary IT solutions for clients, as well as ancillary services including energy audits and property development monitoring. The Group employs 580 people and has a network of around 2,000 valuation experts. It undertakes 300,000 property valuations annually and has around 100,000 clients including over 90% of the Spanish banks. Carlos Santana, Head of Advent International in Spain, commented: “Tinsa has gone through an impressive transformation and the current management team, in partnership with Advent, has done an excellent job of consolidating the company’s market position in Spain, whilst driving its international expansion. We leave the company in an ideal position to continue growing successfully, building upon its international market leadership and maximise its potential going forward.” Ignacio Martos, Chairman and CEO of Tinsa, added: “Over the past few years, Tinsa has become one of the largest property valuation businesses in Spain and Latin America. Tinsa is renowned for its proactive, client orientated approach and its multinational footprint. I would like to thank our employees for their continuous commitment during these years and Advent International for the valuable support in aligning our business and positioning it for further growth. Cinven’s investment will enable us to continue improving the level and range of services we provide to our customers, maintaining and extending our IT investments for deployment within their businesses and helping our clients to improve the speed and accuracy of their property valuations. I am delighted to be working with Cinven, who share my vision for the Group, and I believe that together, we can achieve significant growth for the business. ”
ANACAP ACQUIRES 2 BILLION NPL PORTFOLIOS FROM GE AND RBS AnaCap Financial Partners (“AnaCap”), the specialist European financial services private equity firm, has announced the successful completion of the acquisition of two portfolios of Italian non-performing loans (NPLs) with a face value of more than 2 billion. The portfolios have been acquired by AnaCap Credit Opportunities III, LP from two Italian securitisation special purpose vehicles whose asset-backed securities were majority owned by GE Capital Real Estate and The Royal Bank of Scotland. They comprise of two separate portfolios, each having a gross book value of about 1 billion and including secured and unsecured SME loans, with the secured positions held against residential and other commercial property. The acquisition adds to AnaCap credit funds’ existing holdings in Italy, which include two NPL portfolios totalling 2.5 billion, acquired from UniCredit in 2014 and 2015. AnaCap funds have now purchased around 8 billion of Italian NPLs over the past four years, as well as a 550 million performing portfolio of Italian salary guaranteed loans. Justin Sulger, a Partner at AnaCap Financial Partners LLP, commented: “We are delighted to have completed the acquisition of these two portfolios, adding to our extensive track record in the Italian market. Our earlier NPL investments mean that we are very familiar with these types of residual claims and their varied servicing requirements. We are also pleased to continue to work with a growing range of financial institutions undergoing restructuring across Europe, including numerous repeat transactions, as well as a broadening network of trusted local partners.” AnaCap was advised by Orrick. PwC Advisory, Clifford Chance and Chiomenti Studio Legale advised the vendors.
APPERIO CLOSES £1.7 MILLION SECOND SEED FUNDING ROUND Notion Capital, NextLaw Labs and IQ Capital back legal tech company’s mission to bring transparency and information
symmetry to the legal sector. Apperio, the provider of a real time legal fee tracking platform, announced that it has closed a £1.7 million seed funding round led by Notion Capital, with participation from, NextLaw Labs and IQ Capital. These respected venture funds have come together with angel investors in support of Apperio’s vision to provide law firms and clients real-time transparency on legal fees that is accurate and meaningful. After winning London tech accelerator Seedcamp in 2013, Apperio secured an initial funding round led by prominent angels including Stephen Chandler, Jan Reichelt and Andy Phillipps. Within a year of launching the platform, Apperio had already secured ten corporate clients. It has since formed partnerships with 17 of the top 100 UK law firms and monitored over £20 million in legal fees through its system. This funding round was led by Notion Capital, a fund focused on high potential businesses in the cloud computing and Software-as-a-Service markets. Ian Milbourn, partner at Notion said, “I am incredibly excited to be investing in Apperio. I have thought for some time now that the legal sector is ripe for disruption with the right technology and Apperio is well placed to spearhead this. The time has come for transparency in legal fees. and law firms and their clients are recognizing this. In addition the analytics that the platform provides are invaluable and enable law firms to greatly improve their behavioral and financial performance.” Apperio CEO and founder Nicholas d’Adhemar, said, “This investment from such a fantastic syndicate really supports our mission to bring meaningful transparency to the legal industry. With the new funding we will be able to grow our core teams to further strengthen our products and support our clients.” Legal fees are complex and the billing system opaque, to the detriment of both law firms and their clients, with months spent wrangling over fees. As an industry law firm average, the lockup period (unbilled WIP plus debtor days) is 120 days and recovery rates are around 84%. Clients face uncertainty over pricing and find it difficult to accurately understand and budget for
CLEARWATER INTERNATIONAL HAS ADVISED PRIVATE EQUITY HOUSE, NORTHEDGE CAPITAL (NEC), ON THE MBO OF DIRECT HEALTHCARE SERVICES (DHS) South Wales based DHS, is a specialist British manufacturer of pressure area care solutions with innovative technologies, designed in partnership with leading clinical and healthcare establishments. DHS works closely with tissue viability nurses to design and manufacture mattresses, cushions and overlays to enhance the quality of patient care across the UK, for acute and community NHS trusts. Private equity house NEC has taken a majority stake in the company and Michael Joseph, Chairman of NEC, will join the Board. DHS will use NEC’s investment to further its commitment to core intellectual property, expand the team, pursue a buy and build strategy, and accelerate growth into international markets. Clearwater International advised NEC on the MBO, led by CEO Michael Reeves, directors John Clarke and Ramesh Jassal, and associate James Kennedy. Graham Ewart, CEO, Direct Healthcare Services, said: “The partnership with NorthEdge is a significant milestone for DHS. We are fortunate to be working with a team who not only share our vision for business growth, but fully support our unremitting dedication to delivering the best customer value. This funding allows us to accelerate our growth aspirations and continue to invest in what matters most to our customers – delivering genuine innovation. With a top class management team now in place and the support of NorthEdge we are truly excited about what we can achieve together.” Jon Pickering, Director, NorthEdge Capital, said: “It has been a pleasure working with the team at DHS and we are delighted to conclude this investment. The team has a robust plan in place and I am confident that with our M&A expertise and ability to offer follow-on funding, their marketleading platform will continue to develop even further.” John Clarke, Director, Clearwater International, added: “We’re pleased to advise NEC on their investment in DHS. The funding offers DHS the chance to expand the business and continue to work on new technologies and innovate products. We look forward to seeing these developments”.
BAIRD CAPITAL EXITS ALPHA FMC Baird Capital, the direct private investment arm of Baird, announced that it has successfully exited its investment in London-based Alpha FMC. Alpha FMC is a leading international provider of management consultancy services to the asset and wealth management industries. Baird Capital invested in London-based Alpha FMC in October 2013 and has since supported the management team›s achievement of significant growth in revenue, profits and in the operating platform. During the period of Baird Capital›s investment, the business increased consultant numbers from 99 to over 200 deployed currently. Baird Capital’s investment in Alpha was managed by two of its UK partners, Andrew Ferguson and Dennis Hall. Andrew Ferguson commented «Alpha is clearly now a leading global asset management consulting firm. It has been a pleasure working with Euan Fraser, Nick Baker and the rest of the management team and supporting their growth ambitions.» Alpha FMC Global Chief Executive Euan Fraser «We have greatly enjoyed working with Baird over the last two years and have hugely appreciated their support in growing our business. Baird provided very helpful input into both the strategic and operational development of the business working with us to focus on building our global footprint whilst helping implement the infrastructure platform to support the continued growth of the business. They have an open and direct approach and culturally were very well aligned with Alpha.»
BRIDGES EXITS APPRENTICESHIP PROVIDER BABINGTON GROUP AFTER STRONG GROWTH o o o
Babington is now one of the UK’s leading apprenticeship and traineeship providers Revenues have increased eight-fold under Bridges’ ownership During the period it has provided training to more than 32,000 learners and helped over 3,700 formerly unemployed people to find jobs
Sale price of £22m represents an IRR of 33% for Bridges
Bridges Ventures (“Bridges”) announced the sale of Babington Group (“Babington”), one of the UK’s leading providers of apprenticeships and training courses, to RJD Partners for £22m. Bridges, a specialist sustainable and impact investor, originally invested in Babington Group in 2009 via the Bridges Sustainable Growth Fund II. Under its ownership, Babington’s revenues have increased from under £2m to more than £15m, thanks to strong organic growth and two strategic acquisitions. Today’s sale price represents an internal rate of return for Bridges of 33%. Bridges invested in Babington in line with its focus on backing companies that have a clear growth opportunity by tackling major societal challenges or responding to long-term macro trends. A skills shortage continues to hamper the UK’s economic recovery, with one in five job vacancies remaining unfilled; while employment among 16-24 yearolds continues to lag behind pre-crisis levels, with almost a million classified as NEET (not in education, employment or training). Bridges believed that Babington’s high-quality apprenticeships and traineeships could help to address this skills gap, by allowing businesses to harness fresh talent and enabling staff to develop specialist skills through on-thejob training. The Bridges team, which has extensive experience of buy-and-build strategies, worked closely with management throughout the investment period – initially to strengthen the senior team, and subsequently to identify, execute and integrate two bolt-on acquisitions. Bridges also initiated the development of Babington’s e-commerce strategy, which led to the creation of its innovative online learning platform. The company has also continued to diversify its product offering, by expanding its Traineeship provision and increasing the breadth and depth of courses available: it now offers qualifications ranging from Intermediate Apprenticeship (Level 2) all the way up to Doctorate Level (Level 8). Notably, it has become a market leader in Accountancy and Financial Services, where it is rated as ‘Outstanding’ by Ofsted and enjoys
success rates 10% above the national average. It has been the UK’s largest provider of Chartered Insurance Institute qualifications for the last three years. Under Bridges’ ownership, Babington has supported over 32,000 learners, and helped over 3,700 formerly unemployed people to find jobs. Last year alone, it trained 1,600 16-18 year-olds at risk of becoming NEET, with about two-thirds of its students coming from underserved areas of the UK. Throughout its strong growth, student satisfaction levels have remained consistently high, with 93% citing overall satisfaction (against a national benchmark of 85%), and employer satisfaction at 92% (against a national benchmark of 74%). It now works with over 2,100 employers to source and support talent. Garret Turley, partner at Bridges Ventures, said: “We have always believed that apprenticeships can play an important role in tackling the UK skills gap – and we identified Babington as a high-quality provider that could help to meet this growing need. We’re very proud that our investment has enabled the company to achieve a step change in its growth since 2009, allowing it to help thousands more students gain additional qualifications. With its outstanding management team, strong product offering, and exceptional satisfaction rates, we fully expect Babington to enjoy continued growth under its new owners.” Carole Carson, CEO of Babington Group, said: “Bridges has been a consistently supportive partner for Babington since 2009, helping us to strengthen the team, build out the online platform and promote our brand – ultimately enabling us to work with more employers and reach many more learners. Apprenticeships are a vital tool in helping to address skills shortages in the workplace, and we continue to see strong support for them both at policy level and within the business world. This leaves Babington ideally positioned to explore additional growth opportunities in the coming years. Keely Woodley and Victoria Giles of Grant Thornton advised the shareholders on the process, with legal advice from Richard Spink and Tim Roberts of Burges Salmon.
BARRY NORRIS ASSUMES FULL OWNERSHIP OF ARGONAUT CAPITAL Argonaut Capital founder Barry Norris has assumed full ownership of the specialist European equity asset manager, subject to completion via a scheme of arrangement and regulatory approval. Formed as a joint venture between the Argonaut founders and Britannic Asset Management (later known as Resolution then Ignis) in 2005, a passive minority stake in Argonaut was retained by Standard Life Investments following its acquisition of Ignis in 2014. Following completion of the deal, both SLI and Oliver Russ will exit the business. Norris says Argonaut will flourish as a fully independent business, with the firm’s strong long-term track record built upon its distinct ‘earnings surprise’ investment process. “This ownership agreement demonstrates my belief in Argonaut and my long term personal commitment to the business, our people and our unitholders,” Norris says. “Our passion and conviction in our investment process and our ability to meet our clients’ needs has been and will continue to be the central driver of Argonaut’s success.” The agreement also provides an opportunity for Argonaut to focus on the fast-growing core of its business, its topperforming European Alpha, pan-European Alpha and Absolute Return franchises – which now constitute more than £1.1bn of assets under management. Accordingly, Liontrust has agreed to acquire Argonaut’s £169m European Income and £131m Enhanced Income funds, with manager Oliver Russ moving to the group. Jonathan Polin named Chairman of Argonaut Capital In addition, Argonaut Capital announced the further strengthening of its corporate governance, with the appointment of Sanlam CEO Jonathan Polin as Chairman.
Polin played an instrumental role in founding Argonaut alongside Norris while at Britannic. “I have a long association with Argonaut and am extremely pleased to witness its strong growth, particularly since the business became operationally independent,” Polin says. “Argonaut’s investment process has proven the test of time and this move will allow the group to continue to invest in its investment team and distribution capabilities.” Argonaut last year added two analysts to its investment team, which is managed by Greg Bennett. Bennett has been comanager on the firm’s European Alpha, pan European Alpha and Absolute Return strategies alongside Norris for the last four years. Bennett says focusing on ‘earnings surprise’ investment philosophy distinguishes Argonaut from the vast majority of fund managers. “We have broadened our investment team through recent hires and will continue to deepen our talent pool of analysts capable of identifying earnings surprise.” The transition of Argonaut’s European Income and Enhanced Income funds is expected to be completed in early June 2016. “We feel it is important that our Income fund unitholders can have the opportunity to remain invested with Oliver, with minimal disruption,” Norris says. “We wish Oliver success for the future and all the best in building his income franchise on the
PIONEERING INSURANCE ADVISORY FIRM ‘DUKE RISK CONSULTING’ LAUNCHES Duke Risk Consulting announced the launch of the company which provides pioneering specialist insurance advice. Duke Risk Consulting has been formed to meet the growing demand for genuinely independent insurance knowledge, skill and expertise to buyers of commercial insurance. Duke also provides in-house style advisory services to create understanding and transparency. As part of these services Duke also specialise in claims management
and cyber risk analysis and insurance. Andrew Ducat, Founder and CEO of Duke Risk Consulting said: “We are seeing significant changes in the insurance landscape and there is a need to provide more progressive and dynamic services that are not dependent on the sale of insurance products. “Duke is not an insurance broker or insurer. Our raison d’etre is to empower clients to make informed ‘product value’ decisions. “Commercial insurance transactions are complex, we give clients the tools and expertise to execute these transactions. This gives clients a strategic advantage and helps them redress the imbalance that exists between buyers and sellers of insurance.” Duke Risk Consulting works with clients to ensure that their direct and indirect insurance policy requirements and obligations are incorporated into the business’s operational procedures. Duke is able to bring clarity to the insuring obligations associated with the client’s supply chain relationships. Such obligations are sometimes opaque and the implications within the relevant contractual terms can have significant impact. Cyber or ‘network’ exposures are an increasing concern to many businesses. Duke works with clients to evaluate the specific risks and their impact, as well as mapping these against any existing insurance covers. Traditional insurances provide varied responses to cyber risks and Duke assists clients in understanding the adequacy (or otherwise) of these. Duke Risk Consulting also has considerable experience in the management of insurance claims across multiple insurance classes. Duke works with clients to analyse policy cover and assess claim merits under the policy; ensure satisfaction of the policy notification provisions and prepare claims submissions to insurers. The subsequent management of the claim process ensures that claims are managed to the client’s advantage and progressed efficiently. Where appropriate Duke also works with specialist insurance lawyers in pursuit of recovery under our client’s policies. This approach combines practical market experience with legal expertise to maintain efficiencies within the process.
â€œA Gamechanger changes the way that something is done, thought of or made; they transform the accepted rules, processes, strategies and management of business functions. They shift behaviour, shape culture and make clever happen.â€?
11 Gamechangers Gamechangers 19
ANKER SORENSEN AND JULIEN DE MICHELE JOINING DE GAULLE FLEURANCE & ASSOCIÉAS PARTNERS Anker Sorensen, was previously a partner of Reed Smith LLP and Julien de Michele was a partner of Latournerie Wolfrom Avocats. They are joining De Gaulle Fleurance & Associés to develop an offer dedicated to restructuring under-performative corporations, covering the overall spectrum of crises scenarii, from distressed M&A to sanction proceedings, including financial or operational restructuring within preventive and judiciary proceedings framework. They present their project: “Our complementarity is going along with the full service offer developed by De Gaulle Fleurance & Associés and constitutes an asset to accompany clients, particularly in financing, litigation, corporate, employment, tax law and IP-IT.” Their joint expertise, in counseling and in litigation, provides solution to sectorial challenges that can face De Gaulle Fleurance & Associés’ clients and is in coherence with the current market structural trends. They both have a deep experience in domestic and cross-border restructuring, concerning clients active in service sectors, notably financial and industrial ones. Furthermore, they will intervene in close collaboration with the other De Gaulle Fleurance & Associés’ partners in transport, press, media, health, and real estate sectors, so as in hotel and industry businesses, such as the automobile industry. Admitted at the Paris Bar since 1990, Anker Sorensen is a graduate of the Institut d’Etudes Politiques of Strasbourg and has a Postgraduate degree of the Ecole de Management of Strasbourg, as well as two Master’s degrees in Law from the Université Paris 1 Panthéon-Sorbonne. For the most part, he assists North European and Anglo-Saxon clients in plant closing and transactions during crises scenario. Also, he counsels his clients in their pre-insolvency strategies. Regularly, he writes for journals such as the International Corporate Rescue, The Journal of International Banking Law and Regulation, and The International Company and Commercial Law Review. Moreover, he chaired the French section of the Turnaround Management Association until 2007. Admitted at the Paris Bar since 2003, Julien de Michele has a Postgraduate (LLM) degree in European Business Law from the Paris 2 Panthéon-Assas University, as well as a Postgraduate degree in Business Law from the Business Law Institute of Aix-enProvence. He is a member of several associations, more precisely, INSOL Europe, IFPPC, and Droit & Commerce. He is teaching restructuring and insolvency law at the Paris bar law school, so as for the students of the “Judicial prevention of difficulties and restructurings” diploma offered by the Business Law Institute of Aix-en-Provence. Mostly, his clients are French and European industrial corporations, service companies, and investment funds. Julien de Michele has been listed in the Legal 500 Paris. De Gaulle Fleurance & Associés, which has already a proven
expertise in the support of struggling companies through counselling and litigation, is willing to develop, thanks to these two arrivals, a unique, complete, and leading practice. Each year, the overall activity of the law firm is rewarded by international guides (Chambers, Legal 500, Best Lawyers, Décideurs-Leaders League…).
CLEARLYSO HIRES MATTHEW VICKERSTAFF AS HEAD OF INVESTMENT BANKING ClearlySo, the United Kingdom’s leading impact investment intermediary, announced that Matthew Vickerstaff has been hired as head of investment banking. In this new role, Vickerstaff will assume overall responsibility for ClearlySo’s established investment banking and capital raising activities; including equity and debt placement and corporate finance advisory business. This role will include the firm’s activities with early stage highimpact entrepreneurs, more established businesses and impact investment funds. Vickerstaff joins ClearlySo after a successful career at Societe Generale where he was responsible for managing the global structured finance teams including infrastructure, real estate, aircraft, shipping sectors, and export finance. Before his 17 years at Societe Generale where he spent time in Toronto, New York, Paris and London, Vickerstaff began his career at Hambros Bank. He brings a wealth of advisory, bank financing, fixed income and capital markets, project finance and other structured finance experience, as well as broad sector knowledge and expertise; which will be highly valuable for ClearlySo’s clients and investors. The addition of Vickerstaff comes on the heels of ClearlySo’s announcement that capital raising activity for their clients has surpassed £100 million and the firm gears up for further growth as impact investing rises to prominence. Matthew Vickerstaff, head of investment banking, stated: “I am delighted to join ClearlySo at what is such an exciting and dynamic time for impact investing, and for such a recognised leader in the market.” Further commenting, Rodney Schwartz, founder and chief executive: “It says a great deal about the development of impact investment, and ClearlySo’s position in this field, that it was able to bring in someone of Matthew’s outstanding calibre. He will significantly broaden our capacity to add value to clients, challenge us to bring in the best of mainstream practice and accelerate the development of our human capital. We are confident that Matthew shares deeply the values which underpin this field, and it says a great deal about Matthew that he saw the opportunity to use his valuable skills to change the world.” Vickerstaff joins three other members of ClearlySo’s management team, comprising Head of Impact Services Lindsay Smart, ex-Vigeo UK/US head, Chief Marketing Officer John Lloyd, who recently arrived from Fintech leader Traiana, which successfully exited in a trade sale to ICAP in 2007, and Founder and CEO Rodney Schwartz.
CLOSE BROTHERS HIRES INDUSTRY HEAVYWEIGHTS FOR ITS TECHNOLOGY SERVICES DIVISION
research and business development roles with IPD, RREEF – the alternatives asset management division of Deutsche Bank, and Property & Portfolio Research.
Close Brothers announced that it has appointed three industry heavy hitters to its Technology Services Division to enhance the division’s offering and drive business growth for the company. Reporting into Ian McVicar, managing director, are Sean Callanan, director of technology & services; Nick Moody, director of business development, and David Forbes, director of sales. Sean joins Close Brothers from Hewlett Packard Financial Services, where he held the position of asset recovery leader responsible for managing the technology value-add services offered to HP’s global customers across Europe, Middle East and Africa. Sean will lead on the division’s sustainability solutions offering and focus on the re-use of IT, enabling customers to take advantage of a true circular IT economy.
With over 25 years of real estate experience, Peter is a leading expert in the sector, covering all stages of the investment process including valuation, portfolio management and investment strategy. Peter also has significant experience in real asset research, risk management, as well as organizational growth and change for companies.
Both Nick and David join Close Brothers from Lombard Technology Services. Nick led its business development activities, and brings with him 16 years’ experience in sales, strategy and business development, as well as a solid background in financial services marketing. Nick will head up business development for Close Brothers Technology Services. David held the position of regional sales director, joining the Lombard Technology Services board in 2012 where he was an instrumental part of the most successful period in its 30 year history. David will lead the business’s sales effort. Set up in Q4 2015, Close Brothers Technology Services forms part of the Close Brothers Leasing and Rentals division and offers UK businesses support when acquiring, deploying, financing and managing their technology assets. Ian McVicar, managing director of Close Brothers Technology Services commented: “These new hires are further evidence of the high calibre team we are creating at Close Brothers Technology Services. By adding additional expertise to our business, we aim to be the go-to provider for businesses looking to reduce their IT expenditure, boost efficiency, and improve control to deliver more sustainable solutions.”
GLOBAL REAL ESTATE INDUSTRY SPECIALIST PETER HOBBS APPOINTED MANAGING DIRECTOR OF PRIVATE MARKETS Appointment will significantly enhance bfinance’s private markets expertise and help drive the business forward bfinance, the independently owned investment consultancy, announced the appointment of global real estate industry specialist Peter Hobbs as Managing Director of Private Markets in bfinance’s London office, with a mandate to further expand the company’s growing private markets business. Peter joins from MSCI where he was Managing Director for Real Estate Research and Key Global Accounts, responsible for benchmarking and portfolio analysis, risk services and method development. Prior to this, Peter held various senior global
Peter is a member of the U.S.-based Real Estate Research Institute’s Advisory Board and the Asia-based Real Estate Investment Institute Global Advisory Council. In 2015 he was shortlisted for Outstanding Industry Contribution at the IPE Real Estate Global Awards 2015. Peter has a PhD and is a member of the Royal Institution of Chartered Surveyors (MIRCS). At bfinance, Peter will lead on expanding the consultancy’s private markets business, which has been in much demand as institutions have increased their allocations in this area in a search for higher yields and improved sustainable long-term performance. bfinance’s private markets team consists of consultants and operators (principal investors) with years of experience in private equity, real estate, infrastructure equity and debt. The range of services provided includes portfolio strategy and design, portfolio risk reviews and solutions, investment manager search and selection and due diligence. Clients typically retain bfinance as an ongoing and active advisor to provide fully customised investment programme design and management or to deliver ongoing active advisory and monitoring solutions, while the consultancy also provides services on a modular basis. David Vafai, CEO at bfinance commented: ‘We are delighted to welcome such a well-respected and experienced figure as Peter to lead our growing private markets business. It is an area that has seen a significant rise in interest from institutions as they search for better returns and performance and our team of consultants and specialists has been advising a broad range of both pension funds and insurance companies to help them achieve their investment goals in this area. We see Private Markets as key to our overall expansion strategy and with Peter leading the team we are confident that this important element of our business will make a strong contribution to bfinance’s overall growth in the coming years.” Peter Hobbs, Managing Director for Private Markets, bfinance, commented: ‘bfinance is a leader in the investment consultancy industry and recognised for providing award-winning advisory solutions so I am very pleased to have joined such a well-regarded firm. Private Markets is one of the fastest growing areas for institutional investment, with real estate a key sector, and I believe my considerable experience will add value to the team and enhance bfinance’s capability to offer clients the best advice and service we can in helping them to implement their investment strategies in what remain very challenging markets.” reduce their IT expenditure, boost efficiency, and improve control to deliver more sustainable solutions.”
FIRST NAMES GROUP MAKES SENIOR APPOINTMENTS IN THE ISLE OF MAN Leading global trust, fund and corporate services provider, First Names Group, is pleased to announce two senior appointments within its Isle of Man office. Former Managing Director for the Isle of Man, Gary Hepburn, will be taking on a new role as Chief Operating Officer for the Group’s Private Client service line. In turn, Client Services Director Craig Brown will assume the role of Managing Director, Isle of Man. Both changes are effective immediately. In his newly created role, Gary will be looking at all areas of the Private Client business to ensure it is in great shape to deliver against the Group’s long-term strategic objectives. Meanwhile, Craig will head up the Isle of Man office and its multiple client service teams. Gary has over 30 years’ experience in the financial services industry and worked in the UK, Bermuda and the Cayman Islands before moving to the Isle of Man with his family. Gary joined First Names Group’s Isle of Man business as Senior Manager in 2004 and progressed quickly through the ranks, achieving promotion to Managing Director in 2013. He is a Fellow of the Chartered Institute of Bankers holding the Trustee Diploma, and is also a longstanding member of the Society of Trust and Estate Practitioners (STEP). Last year, Gary was named in eprivateclient’s annual 50 Most Influential list. Craig graduated from the University of Cambridge in 1991 and proceeded to add accounting and tax qualifications to his engineering background while working at a ‘Big Four’ accounting firm. He then spent 15 years as head of tax in various sectors and also five years as a director and MD of other Isle of Man corporate service providers before joining First Names Group in 2013. Commenting on Gary and Craig’s new roles, Group Managing Director for Private Client at First Names Group, Mark Pesco, said: “In order to deliver on our long-term strategic objectives we needed someone who truly knows the business inside and out overseeing our private client operations across the whole service line. The resulting new role of Chief Operating Officer for Private Client is a fantastic opportunity for Gary, and one that is richly deserved. Similarly, I am confident Craig will excel in taking over the role of Managing Director for the Isle of Man, given his technical expertise and the time, care and attention he dedicates to his clients and our people. “As an organisation we pride ourselves in attracting and retaining top talent, and believe that promoting from within our own ranks whenever possible is the right thing for our business. As such, we were delighted to be able to appoint both Gary and Craig into their new positions and we wish them both well as they move in to the next chapters of their careers.”
GIUSEPPE MIRANTE JOINS H.I.G. CAPITAL AS MANAGING DIRECTOR H.I.G. Capital, a leading global private equity investment firm with more than 18 billion of capital under management, is pleased to announce the appointment of Giuseppe Mirante as Managing Director of Bayside Capital, the distressed debt and special situations affiliate of H.I.G. Capital. He will be based in London. Giuseppe has over 15 years of private equity and distressed debt experience in Europe. Prior to joining Bayside, Giuseppe was Head of Distressed and Loan Research at BNP Paribas in London. Previously, Giuseppe was a European credit and distressed analyst at Cyrus Capital and Trafalgar Asset Managers. He also cofounded and ran Tigon Capital, an advisory company for private equity and credit funds. He is fluent in German, Italian, Spanish and French and holds an MBA from Columbia University. In commenting on the appointment, John Bolduc, Executive Managing Director, noted, “I am delighted to welcome Giuseppe to the firm. He is a very experienced, international distressed debt investor who significantly augments the expertise and capabilities of our team. I am confident he will play an instrumental role in growing H.I.G.’s distressed debt activities”.
EDISON GROUP APPOINTS TOM TEICHMAN AS CHAIRMAN AS PART OF AN ACCELERATION OF GLOBAL GROWTH New chairman brings proven success in building innovative industry leaders Edison Group, the international equity research and investor access firm, has appointed Tom Teichman as chairman to support its continued global growth plans. Teichman brings a proven track record in helping grow an array of innovative companies into sector-based leaders. He has helped shape many businesses to enable them to become successful disrupters in established markets by either creating new markets or permanently changing the nature of those markets. With his deep expertise in finance and technology, Teichman’s experience includes helping Mergermarket, as the first backer of the M&A deals intelligence service, realise its growth and value and, as the first external investor in lastminute.com, guiding the online travel firm towards its ground-breaking flotation. More recently Teichman has backed Kobalt Music, Mind Candy, the creators of Moshi Monsters, notonthehighstreet.com, Squawka, Hardlyeverwornit, Doctify and Elevate Direct. Teichman will work closely with the Edison board, which continues to be led by Fraser Thorne, CEO based in London, Peter Molloy, head of Edison US, and Neil Shah, director of research. The arrival of Teichman will further accelerate the growth of Edison’s successfully established model in providing quality independent equity research. Since its formation in 2003, Edison has transformed the way companies and investors have been able to access new pools of capital and in-depth, high-
quality equity research, and today serves more than 400 clients supported by over 110 staff, representing a 50% increase over the past four years. Current regulatory changes relating to the provision and funding of equities research, as prescribed by the EU under various MIFID directives, are helping to accelerate the fundamental decline in broker research, which in turn is creating even more demand for Edison’s services. Edison’s clients include London Stock Exchange, Smith & Nephew, National Grid, WPP and HSBC and an array of mid-cap companies across Europe, Asia and the US. Over the past four years Edison has expanded out of its London hub to open offices in Sydney, Wellington, Frankfurt, New York and more recently in Tel Aviv in response to demand for its services. It has also started working with a number of stock exchanges globally to help provide equities research for national and dual-listed companies. About Tom Teichman: Tom Teichman started his career in insurance at Willis Faber before joining Bankers Trust as an economist. He moved to Credit Suisse then Bank of Montreal Nesbitt Thomson ultimately becoming head of European investment banking before taking his investment banking acumen to the technology sector in the early 1990s just as the full potential of the internet was being realised for general business growth. During his career Tom Teichman has helped raised over £3bn for companies. In addition to lastminute.com, Teichman’s technology and media investments include System C, ARC and Argonaut, which he has helped grow either via successful listings and initial public offerings or trade sales. He founded SPARK Ventures in 1996 which listed in 1999. More recently in 2014 he co-founded The Garage Soho, a start-up incubator, with Sir John Hegarty, one of the founders of advertising agency Bartle Bogle Hegarty, which invests in and helps build the brands of tech and creative start-ups. Fraser Thorne, CEO of Edison said: “We are delighted Tom has joined the board of Edison as chairman. Tom brings an understanding of how to maximise gains from disruption to markets from technological innovation, ensuring that the companies he is involved with become successful leaders in their field.
banking, research, tech and growing businesses to help accelerate that growth in Europe and the opportunity that still awaits in the US and across Asia-Pac. Edison stands to benefit significantly from the fall-out from the new and major regulatory and market-driven issues faced tresearch. Investors are clearly seeking information about the next investment opportunity but they do not want this sullied by conflicted positions and commentators, which is not helpful for a calm, unbiased assessment of a company’s value and prospects. Edison cuts through this by providing in-depth, independent views on a company’s prospects and is developing the standard by which all equity research is already measured in the UK and I am delighted to help drive our future success in the USA and other major markets.”
LIVINGSTONE HIRE TO LEAD LOS ANGELES OFFICE - FIRM EXTENDS ITS GEOGRAPHIC REACH AND BUSINESS SERVICES FOCUS Livingstone announced the addition of Los Angeles-based Partner Brennan Libbey. He joins the firm from Houlihan Lokey where he led the Business Services Group. Libbey will head Livingstone’s US Business Services and West Coast teams. Libbey brings over 20 years of mid-market advisory experience and an impressive track record of successful transactions for private equity investors and entrepreneurs. “With customised solutions for mid-market companies and established global infrastructure, Livingstone brings a unique set of offerings to the North American market. I look forward to building the firm’s LA-based team and partnering with Livingstone’s exceptional professionals around the globe as we enhance our coverage of industry sectors in each of our core territories,” said Libbe“Brennan’s hiring represents a critical first step in Livingstone’s strategic expansion to the West Coast,” commented Jeremy Furniss, Partner at Livingstone London. “With an established reputation as a talented deal maker, Brennan will lead Livingstone’s creation of a meaningful and high-impact office in Los Angeles as our firm further makes its mark. We expect to make several additional hires in LA, at all levels.” Libbey’s previous transaction experience is focused on the Business Services sector, with a particular emphasis on outsourced services, including data and technology services, and media and marketing services. Business Services is a core sector for Livingstone, especially in Europe, where the firm has a strong reputation and well-established track record.
Edison will benefit both from Tom’s business leadership and deep expertise in conjoining finance and technology-enabling change for sectors undergoing fundamental shifts in the way they operate. Edison is at the forefront of permanent changes in the provision and dissemination of quality equity-related products and services.”
Prior to joining Houlihan Lokey, Libbey worked at UBS, where he led the firm’s Business and Technology Services Group. He received a B.S. in Economics, with a concentration in Finance, from the Wharton School of the University of Pennsylvania.
Tom Teichman, chairman of Edison added: “The opportunities ahead are significant as Edison moves into its next stage of successful growth after many years of good expansion. Edison has been bold and taken its proven success based on total independence and trust from corporates and investors already, from London to other major financial centres. I am looking forward to bringing my experience in investment
Livingstone’s first hiring announcement in Los Angeles follows on from its recent expansion in the Nordic region. With the firm’s announcement of Livingstone Stockholm, becoming the only integrated international mid-market M&A and Debt Advisory firm with a significant presence in the Nordic region. Livingstone has over 100 staff across seven global offices. The firm looks forward to announcing more additional Los Angeles team members.
â€œGamechanger: A visionary strategist bringing fresh and unique ideas to the table, an individual or business that stands out from the crowd with ideas that inventively change the way a situation develops.â€?
LG ROLLABLE OLED LG Display has a prototype 18-inch screen that rolls up like a piece of paper. The technology builds on LG’s forward-looking OLED work focusing on bendable, roll-able, and curving displays. The company showed similar technology last year as a proof of concept, but kept images behind closed doors. Now LG looks ready to show the world the next step in television screening.
NANOLEAF AURORA The world’s most energy efficient LED bulbs! Nanoleaf is continuously redefining the experience of lighting. Manufacturers are creating new smart lighting products every day – but they’re designing for fixtures and apps, not for the human soul. Nanoleaf create exquisite lighting that seamlessly blends human-centered design with exceptional energy efficiency and believe that living more sustainably shouldn’t involve compromise; each product they create is an extension of that philosophy.
ONAGOFLY NANO DRONE With an intricate design and unbelievable capabilities, the Onagofly Nano drone is revolutionising the drone industry by enabling users to take photos & videos from all possible angles, whenever and wherever. With big features in a small package, the capabilities of this powerful, palm-sized drone are endless. Taking photos & videos comparable to iPhone 6s with 15 megapixels and 1080p, HD, 30 FPS video â€“ the first nano drone to track location from your smart device and records on the go with WiFi connection. It intelligently & instantly maneuvers around walls and trees using built-in infrared technology, weighing in at only 140g, itâ€™s also highly portable.
IMMERSIT Immersit turns your couch into one whole sensory 4D experience, enabling you to physically feel everything taking place on your screen. Bringing the 4D thrill to your home with a plug-andplay product that can be used with any couch and that literally takes the user inside the movie. It starts vibrating and moving based on the film you are watching or the game you are playing, throwing you right in the middle of all of the action. Both movie enthusiast and gamer will be immersed in an unmatched lifelike experience while lying comfortably on their favourite couch.
SENSORWAKE Wake up gently, without sound. With Sensorwake, the beeping days are over. No more alarms, no more ear-piercing noises; just beautiful, delightful scents. Choose to wake up in the best possible way. With amazing scents for a great wakeup â€“ the selection of scents is designed to give you the best experience possible each morning. With the scents being hand-designed and created in France, they respect the most demanding air quality organisations.
INEMOTION SMART SKI AIRBAG VEST The Smart Ski Airbag Vest detects unavoidable falls and inflates in less than 100 milliseconds in order to protect the most sensitive areas before the impact with the ground. With optimum protection, tests have proven that energy absorption capacity is 4 times greater than a standard dorsal protection, in compliance with current regulations. Offering detection technology with 1000 analyses/ second of the skier position, the system measures the skierâ€™s every movements to detect a loose of balance and protecting in less than 100 milli-seconds; the airbag is inflated at the optimum pressure, protecting the skier before the impact on the ground. The system also analyses and sends data to the user to understand better the reasons of fall and upgrade the detection to offer a better protection next time.
SEVENHUGS’ SMART REMOTE Introducing a remote control for everything, the world’s first smart remote to control your smart home with just one touch. Compatible with Nest, Philips Hue, and Sonos, the Smart Remote is universal, simple, and completely customisable. Point anywhere by pointing to the connected device you want to control at home, the Smart Remote recognises where and what you’re pointing to, it’s screen also adapts when you point at any connected device or location in your home.
ACTIVEON SOLAR X A solar-powered action camera that can take 70% of its charge from the sun in just 30 minutes! The Solar X uses a 16MP CMOS sensor to shoot a combination of stills and video footage, and can supplement its two-hour internal battery with four hours of additional charge from a pair of solar panels mounted on its detachable charging case. In Burst Speed Charging mode the case takes half an hour to get the battery from flat to 70%, and then it takes a further half an hour to get it to 100%. The Solar X uses a 2” touch screen for its menu system, as a viewfinder and for viewing footage recorded. Video can be recorded in what the company calls 2160p 4K resolution, but at a rate of 15 frames per second. The camera can manage six frames per second in stills mode, and users will have control of white balance, ISO and exposure values. The camera can also detect when it is mounted upside down. Built-in Wi-Fi allows the Solar X to be controlled via a Smartphone App, and the company will launch an automatic cloud service for its users.
Q. After speaking with you in our last issue of Gamechangers, a new UK survey* shows that more than two-thirds of 18 to 34-year-olds still prefer to pay for goods with cash. From research held at Allied Wallet headquarters, what are your views on this? I actually kind of disagree with that, because I’ve been seeing more teenagers paying with plastic than cash on our end, and it also depends on what they’re buying. It all depends on the price, the price point, what they’re spending money on. Is it a faceto-face transaction or is it an electronic transaction? From our point-of-view, we’ve seen a massive increase, probably just this year alone, of 11-12% in ages 18-25 have increased in online spending. For example, apps on the phone – which is a registered card payment, so they have to reload the card information on the checkout page to execute a transaction, and that’s been a key player. We call it tokenisation. Tokenisation means once you do one payment on a website it just memorises your information so you never have to re-enter your data again. So if you try to make a payment again for the same website, it asks you: Is this the same information you would like to use, password, digits of your card number, etc. Then you confirm and proceed. So we’ve seen an increase overall, based on the technology that we are providing. We’ve seen an increase in card payments over cash. Q. With statistics showing that 18 to 24-year-olds are slow to adopt ‘Online Wallet;’ payment solutions, could it actually be the younger generations who are preventing a digital payment revolution? It could be. I mean, like I said previously, it depends what they find. It could be possible. But with all the new gigs, for example, online games – the majority of the people that do online games represent about £10 million a day in transactions, aged between 18-23. Now they cannot pay cash, you have to pay electronically and we’ve seen more joined up for online games. There has also been a massive increase in sign-ups with these younger ages. At Allied Wallet, we see that as a potential growth in the youth, preferring to transact electronically. Q. What are the benefits of using these more advanced forms of payment over cash? If somebody asked if you could pay cash instead of card, with your card your money is protected, so if anything happens you can always charge it back. But with cash, if you take it out of the ATM you could be followed or robbed by a pick-pocket. The majority of cards these days link to the backend, collecting miles, awards, you can actually get clothing, free coffee, travel, vacation - so all the points you can spend. So I would definitely say for sure, spending money on plastic is more beneficial and safer than cash in the pocket. Q. With other payment solutions there are a lot of benefits involved, for example American Express, MasterCard, etc. Could you tell us a little bit more about the benefits of processing with Allied Wallet? The benefits of Allied Wallet are not only that we provide Visa, MasterCard and American Express, but also many other payment methods that are not even offered by banks. For example, in the UK you can only have the basic options, which is probably Visa, MasterCard and maybe American Express – only with Allied Wallet you have Visa, MasterCard, American Express, JCB for Japanese consumers, China Union Pay for Chinese consumers, direct debit for all European people who have no credit cards and want the option of internal transfer between the banks, Klarna Pay, which is the largest payment option in the Scandinavian countries, Giropay, which is the largest payment option in Germany, and many other payment options and local payment services. We do local payments in Eastern Europe, Asia and the USA. We handle ACH, which represents 3% of the US Treasury daily transactions we’re probably talking Visa and MasterCard combined in terms of transactions. And when you sign up with Allied Wallet, you would have an exposure to accept all these payments, plus (and there are many pluses) there’s shopping carts. We also offer about 35 of the largest shopping carts in the world, which is give-and-take about 60-70 million users. If you are integrated and/or the merchant, and want to integrate any shopping carts, you can take up to six months as you have to hire developers and IT, it can cost you a fortune to integrate them and have them on your platform. Most of these shopping carts are in a closed loop and they don’t offer any services to small merchants. You need brand new services to a small merchant up to an IPSP, a large financial institute. The benefits of dealing with Allied Wallet is you have an exposure to 35
payment shopping carts and you also have all the payment methods you can add to your payment page. It’s an open channel to literally link you to the rest of the planet. Q. The persistence of cash is surprising given its inconveniences and more importantly, the risks involved. For both businesses and consumers, what are the main risks involved with cash payments? Well, you see, we do work with B2B a lot. The reason it’s beneficial is because we don’t want to be the front for the consumer only we want to do B2B. For one, we find that it’s less competition in the market; secondly, nobody can provide such a massive service for B2B like Allied Wallet. For example, I can use PayPal, as it is more for the consumer. The majority of PayPal customers are consumers, not B2B. The majority of Allied Wallet is 99% of B2B, so we provide more services to businesses and we’re looking at Allied Wallet as a wholesaler, not a retailer. So we are both wholesalers and a retailer at a global level. Q. In your opinion, what age range do you feel is most reluctant to embrace the digital payment revolution? I would say 25 – 35 years. Q. Working B2B over other digital payment solutions companies that also work with consumers as well, can you see a noticeable difference in younger and older business owners? I would say 60% of our portfolio represents entrepreneurs. There’s a lot of new-coming businesses and a lot of new concepts, especially in the mobile payment apps. As a whole, we are seeing a lot of apps coming out. Some of them, within six months of being in business will generate more money than ‘old school’ companies that have been out there for 10 years. You’d be surprised when you look at the numbers. You get the new, young entrepreneurs turning in an application after a six-month-start, generating £2-3 million a month transacting online. Then you have companies that have been around 15 years that don’t even do £2 million a month of transactions. So it’s pretty impressive. This is why we’re dedicating more effort into a program which Allied Wallet created a couple of years ago, it’s called “The Big Idea” and the big idea is all about coming up with a new proposal and we will back you up. We’ll take your account, and give you a chance to accept credit cards online. If you walk into any bank, let’s say today Andy Khawaja will start a brand-new company, I just graduated from college and I walk away with a brilliant idea, I have built an app with a couple of IT developers. I walk into the bank, as I need a merchant account to process for my company. “Which company is it?” they’ll ask. “Well, we just started two days ago.” And in response to that the bank will always respond cautiously with “Okay, how are you going to back it up? How are you going to cover the risk? You’re going to process credit, right? How much are you looking to do?” I want to do £1 million a month. The banks “Well, you need to have a bank account, you need at least £300,000 a month in the account just to cover any potential charge-backs.” For the bank, it’s just risk upon risk, that they’re not willing to take. That’s the problem with a lot of these entrepreneurs; they don’t have that much money to come up with. So their dream is over, they go out of business before they even started business. Before they could get into the business, they’re already out of business. Now what Allied Wallet does in terms of “The Big Idea” is we give you the chance, we say, okay, we studied the business plan, we like it, this is great, we’re going to go ahead and give you a chance to start. We’re going to give you the opportunity to start transacting and taking credit cards. You as an entrepreneur can move on and start doing business. The banks, they turn it down and don’t give them the chance. People talk and with time, word of mouth is that Allied Wallet is accommodating businesses and helping entrepreneurs with their new start-up businesses. That’s what we want. That’s business. Q. Some more recent reports have put the cash payment preference in younger generations down to ignorance of risk, which the digital payment revolution protects against. Do you agree with this? I don’t agree with it. I think everybody should be given a chance to transact and start a new business. You should not take their dreams away from them.
Q. Coming from a business perspective how do you measure the progress towards a cashless society? First, the cash flow is easy to get. You transact your credit via a third party, so basically the processing is settling and you pay them out. When Allied Wallet pays out the only concern is the losses – we make sure that the compliance, underwriting and the risk departments, do what they do best. Q. Do Allied Wallet have intentions to reach out to consumer-to-business payments? We don’t – we prefer to stay away from that business because that puts Allied Wallet in a category of money transmitting and we definitely want to stay away from that. Once you start dealing directly with consumers, consumers paying consumers, etc - that’s what gets you into the grey area of paying out, anti-money laundering policies and KYC. Money transmitting and transfer is a nightmare and we definitely want to stay away from that field. We would rather just be the credit card processor, the risk/cyber security and fraud prevention platform. We will leave the transmitting to Western Union, PayPal and other companies that are heavily involved in the money transfer business. We prefer to focus more on the credit processing and stick to B2B. Q. Another surprising statistic for most was the recent rise of cheque payments, again more so within the younger generation, where do you feel this roots? I do have a cheque-book in the UK for my bank and I have a cheque-book in the US. I’d say written cheques still dominate about 22% of the market and in the UK it could probably be 17% of the market. Mostly electronic, a lot of people - 20 years ago I’d say – 90-95% of the market was paper cheques, if not 100%. But today 70-80% of the older generation who represent the market, they use that, but the new generations taking over with the digital payment. In the next 20 years, that older generation is going to be renewed by the newer generation, so we’re going to see a massive drop to maybe less than 2% in paper cheques. Everything is electronic, that’s what we see here at Allied Wallet. Q. Taking into consideration that it takes the best part of a working week (and in some cases longer) for a cheque to clear, causing issues for both business and consumers. The “instant world” we now live in, could soon take steps back in regards to payment solutions if this continues to increase. What are the vital points younger businesses and consumers are to be made aware of in relation to this? Money in the bank today is better than money in the bank tomorrow, because if you have your money in your account every day, it gives you an extra buffer to achieve better business tomorrow. We have learned over the years that a paper cheque takes time to get there, you’ve got to deposit it and the bank will take 48-72 hours to credit the funds as they have verify the funds available to the third party bank. That is why an electronic transaction is the master of all transactions; it’s money in the bank today. We advise our merchants to transact via credit card payment over any other payment. We encourage them to do this because if you don’t care about when you’re going to get funded, then that’s fine. But our advice to you, why get funded next week when you could get funded today? Q. In a recent report from MasterCard, surprisingly the United Arab Emirates amongst countries within Europe (including Italy, Greece and Poland) was within the bottom 20 opting for cashless methods. What areas in the world do you feel are most at risk steering away from a cashless society? I would agree 1000%. In fact, I’ve been to Abu Dhabi and Dubai, five trips in the past two months, trying to build an infrastructure for them for more digital transactions. I was interviewed on Dubai TV, CNBC TV and MBC, which is the largest Arab network, Saudi Arabian owned channel. These 3 interviews were live, talking about these subjects and talking about how we can improve it to be more digital, over just cash transaction and enabling for a risk-free environment in transacting digitally. So these things I’m working on. I do agree with you, the United Emirates is still a bit behind in the electronic transaction world but that’s going to change by the end of 2016. Thanks to the Allied Wallet platform, it’s going to be implemented before the end of this year. Why do you feel are certain countries so reluctant in the first place anyway? It seems to be down to lack of knowledge, lack of understanding of the business, lack of training on a banking level in terms of technology, ignorance of risk and the compliance/KYC. They simply don’t know what to do with it. It’s just like the knowledge, they’re probably thinking that the transaction is just a trend and it’s going to come in and out. Nobody quite understands that this is here to stay. It’s going to dominate the world and change the way we do business.
Q. Recent reports also showed both consumers and businesses concern for the risk of technological malfunctions, leaving further doubt in the younger generations’ mind. What do Allied Wallet do to prevent this? Number one, security is very important. If you type in your card electronically, the first thing you’d be concerned about is who you’re giving it to, who is the third-party that is going to be reading it, and is there potential for somebody to take money off your account? Allied Wallet has state-of-the-art technology in terms of the PCI Compliance Level One - everything is encrypted on the page, so once it passes through tokenisation, the card itself will never be read again. It goes into an environment of a data centre that’s pretty much impossible to hack into and read the card again. Even if that fails, the card is completely encrypted. So that’s what we did first, in order for us to protect our consumers’ private data. From there on we assured them that any risk or problems, that we will fully look after them – from the start. We started the company mostly based on fraud prevention, elimination of risk and cyber security with your own transactions / personal data / product information / consumer spending / credit card data / billing address / personal information, etc. So that’s helped a lot, and in this period of time we’ve built a massive reputation. People trust us, they believe in us. You’ve had a multi billion-dollar company that back in the day failed from a data breach. Lehman Bros went down and a few years ago you had banks in Korea showing $20 billion worth of loss and damages from credit card data. That is a big concern for consumers. The reason why these fatalities happen is because they don’t invest in the technology nor do they put the right brains behind the cyber security, which is the most important thing once you transact online, you must protect data. Q. With 10% of the vote favouring ‘Online Wallet’ solutions, what are Allied Wallets intentions to raise this percentage in the coming year? The infrastructure we’re looking at probably raising to buy 50%. The reason why? If you look at the wallet infrastructure, it was created over 12 years ago. We don’t want to switch the name ‘wallet’ to ‘cloud’ as people are pushing for nowadays. We want to keep the wallet, that’s how it is within our infrastructure, virtual wallet, where you can store data, information, etc. I like to think that security is the most important piece, for example, if you look at iTunes, iTunes were hacked, the ‘cloud’ accounts were hacked and that was openly released to the public. That’s the problem if you work with a company; you’ve got to know whom you’re working with. You have to work with a company that has never had a problem, because if there were issues once, trust me, you’ll be hacked again. We came before Apple Pay, Google Pay, Yahoo Pay, Amazon Pay, etc. We are old school. If you look at the chart, the top three companies and payment companies in the world today, PayPal is number one as a virtual wallet and Allied Wallet is the second. Again one of the most trusted payment companies in terms of the virtual wallet, PayPal is first, Allied Wallet is the second. Allied Wallet has been around for over 10 years, and all the other ones have been in existence 1-5 years, they come and go. And the reason why they come and go? Because they fail. The reason why many companies and financial institutions come and go is because they’re only in it for the money. You can’t keep the money if you can’t secure it. So you’ve got to build the security first in order to transact, because if you don’t have the right security in place, you’ll never be able to secure that money and risk it being taken by hackers, what we call a PCI breach. You can’t stay in business if you can’t secure your merchants. That’s why we at Allied Wallet, we started the infrastructure based as a cyber security company. We built our gateway to accommodate security and within five years, we started transacting. These companies come in the first day and want to collect “their” money because they have investors they need to pay back. For that reason, they fail and will continue to fail.
STRIVING FOR PERFECTION MAY DAMAGE YOUR CHANCES AT SUCCESS As reported by Fortune, the Entrepreneur Insider network is an online community where the most thoughtful and influential people in America’s startup scene contribute answers to timely questions about entrepreneurship and careers. Today’s answer to the question “What’s something you wish you knew before starting your business?” is written by Diana Murakhovskaya and Irene Ryabaya, cofounders of Monarq. Coming from the cutthroat world of finance and making the leap to the startup world was initially a scary proposition for them. Their favorite quote since starting Monarq, business focused on connecting women through technology, is from Johann Wolfgang von Goethe: “At the moment of commitment the entire universe conspires to assist you.” Building a company from nothing is an exceedingly difficult thing to do. You will be working yourself to the bone without anyone telling you that you must
do so, meaning you need to be insanely driven and passionate about what you’re building. In any job where you have a boss and structure, there is someone to drive you and tell you what the next steps and measures of success are. Making the leap and leaving that safety net can be terrifying, leaving many people to wait for the “perfect” idea or the “perfect” partner to come along. But when they committed to building connections for women with Monarq, they received an amazing outpouring of support from a lot of great people. They realized that when you start a business, two things often happen: You start to see more holes in the world and come up with dozens of ideas for other businesses, and you’re likely to turn these into side businesses that often become even bigger and more successful than the initial thing you set out to do.
Until you’re in the thick of it, it can be difficult to understand the value and depth of those roles in the success of your company. There is no way you can learn this until you get started. One stark example for us was the value of design. They admit now that they took user experience design for granted because of our analytical background and thought that building a great app was all about the actual app development. They quickly learned that there are many aspects to design—from visual to digital to user experience—and that all of them are integral to the long-term success of any business. You have to design everything, from all of your email communications to ads to event banners, as well as your website and app.
That commitment to your initial mission can create opportunities for connections and serendipity that take you to the next level.
A key component to success is to “know enough to be dangerous” about all aspects of your business, be able to have meaningful conversations, and make quick decisions with everyone who works for you. That being said, you shouldn’t always try to get things perfect or underappreciate the value of a good specialist.
While building your business, you’ll have to fill an insane variety of roles.
So don’t wait for perfection. Commit and the world will rise up to support you.
BANKS REMAIN COMPETITIVE BUT INSTITUTIONAL LENDERS MAKING STRONG PROGRESS WITH INCREASED UNITRANCHE PENETRATION ACROSS EUROPE Bi-annual AlixPartners mid-market debt survey highlights the gap is narrowing between European lending sources. Over the last 12 months, an increasingly diverse mix of non- bank lenders have been active at both the lower (sub- 20 million bilateral debt) and upper (club/ syndicated deals above 200 million) ends of the mid-cap debt market, according to a new survey from AlixPartners, the global business-advisory firm. Highlights: 441 leveraged transactions recorded in 2015 compared to 326 in 2014, albeit partially driven by increased survey coverage Upward trend mirrored in UK and Ireland with deal count increasing by 7% to 234 Traditional banks still dominate midmarket deal flow, with HSBC leading for the second year however total bank deal count fell 4% on average across the top seven lenders
amounts raised by these funds. As a result, the market has become more competitive leading to increasingly attractive terms for borrowers. While we have seen several large funds begin to encroach the lower end of the syndicated market over the last 12 months with bilateral take-and-hold positions, we have also seen increased competition at the lower end of the midmarket with the emergence of a number of smaller funds targeting the SME lending space. With competition intense some of the larger funds have also been observed dipping below their original lending threshold, typically £10m EBITDA, in order to deploy capital. That said, there’s been a noticeable fightback by some UK banks looking to protect ancillary income and this is likely to continue through 2016.” Tom Cox, Director, Debt Advisory at AlixPartners said, “Looking ahead, we expect to see further growth in the nonbank funding market in 2016 as Europe continues its transition towards a more US style financing market. In the mid-term, we believe that competition in Europe will become more intense with increasingly scarce deal flow, which is likely to see more focussed attempts by key funds to source proprietary deals and penetrate regions traditionally dominated by local banks such as the Benelux, Iberia, and the Nordics.” Traditional banks continue to dominate deal flow – but the gap is narrowing
Non-bank lenders are taking greater mid-market share, with the top six funds increasing deal count by 36% on average Deal purpose tracked trends observed in the large-cap market with a decline in refinancing activity during H2 2015 Continued growth of the unitranche product with 111 deals in 2015 (up 61%), across a wider spread of geographies in Europe
Driven by strong institutional liquidity and despite wider macro-economic volatility, transaction volumes in the midmarket were robust in 2015. The annual AlixPartners survey reveals that whilst there has been strong growth in the number of non-bank transactions, the mid-market is still dominated by commercial banks, still representing 67% of all deal participations tracked in 2015.
The UK and Ireland remain the most developed unitranche market with 54 deals recorded, compared to 32 during the full year 2014 (up 69%) Alcentra, Bluebay and Permira Debt Managers were the most active unitranche lenders covered, deploying a wide spread of ticket sizes across a range of sectors
HSBC maintained its position as the most prolific mid-market bank lender for a second year running, with 67 deals recorded in the survey, albeit the gap has narrowed to RBS and Lloyds. HSBC participated in 15% of all deals tracked across 2015 and 27% of deals in the UK and Ireland (albeit the latter was down from 38% in 2014).
Jacco Brouwer, Head of Debt Advisory at AlixPartners said, “We are continuing to see strong growth in non-bank lending, in terms of the number of transactions completed, the number of funds active in mid-market direct lending, and the total
Overall, and despite the usual flurry of deals in December, activity levels across 2015 seemed to point to higher credit quality and a focus on maintaining market share during the first half of the year, as several lenders reportedly turned down deals with aggressive leverage or pricing
requests post summer. Despite strong activity levels in the first six months, mid- market bank deal share contracted marginally in 2015 with total deal count falling 4% on average across the top seven lenders3 surveyed (HSBC, Lloyds Banking Group, Barclays, Bank of Ireland, NIBC, SMBC and Santander) compared to 2014. Non-banks continue to gain traction By contrast, non-bank lenders, several of which are now supported by multibillion £/ funds, have continued to secure market share gains, with the top six non-bank lenders4 increasing deal count by 36% on average. This included the likes of Alcentra which increased its total deal count by 80% compared to 2014, including 16 bilateral unitranche deals (67% of all their deals). With a strong focus on France (85% of all deals), Tikehau Investment Management continued to deploy capital, primarily via senior financings, while Sankaty Advisors and Permira Debt Managers increased deal count in 2015, especially during the second half, supporting deals across the UK, Germany and Scandinavia. While not exhaustively covered in this edition of the survey, Ares Management is also considered one of the leading non- bank lenders in the market, having deployed capital in a number of high profile transactions during 2015, including the 250 million bilateral facility backing Eurazeo’s buyout of Irish tax-free shopping services firm Fintrax (Source: Private Debt Investor). Refinancing volumes down, unitranche penetration up Another clear trend in 2015 was the decrease in refinancing activities. The proportion of refinancing and dividend
recap activity fell significantly, representing just 27% of all deals tracked in 2015 versus 41% in 2014, in line with trends observed in the large-cap market5. By contrast, 21% of deals in 2015 represented add-on/acquisition finance lines for existing deals (versus 17% in 2014) as lenders supported existing credits and sponsors potentially sought to drive value from acquisition synergies and strategic growth. The increased penetration of the unitranche product by non-bank lenders (albeit with increasing participation from certain banks) remains the most fundamental and continuing shift observed in 2015. While allsenior deals remain the dominant financing structure, volumes of these deals declined from 70% to 62%, driven by the increasing penetration of unitranche deals delivered on
CAN SMES DO MORE TO PROTECT THEMSELVES AGAINST LATE PAYMENT? First Capital Cashflow provide insight and advice to SMEs suffering from late payment issues 3 out of 4 European companies have experienced late payment in the last 3 years 59% of manufacturing companies admit they had been asked to accept longer payment terms than they felt comfortable with SMEs need to be more proactive and authoritative to solve the late payment problem “Three out of four companies in Europe have experienced late payments in the last three years, with SMEs likely to be disproportionately affected by this phenomenon.” This is a quote taken from the Ex-Post Evaluation of Late Payment Directive study, published in November 2015, which is set to inform a report on the implementation of the European Union’s 2011 Directive 2011/7/EU (LPD) to be read before the European Parliament and the Council in March 2016. As many businesses will be aware, late payment is still a large-scale problem, with Bacs reporting in July 2015 that SMEs spent a collective £10.8 billion last year in attempts to recover overdue payments, up from £8.2 billion in July 2014. A recent government report stated that,
a bilateral basis by private debt funds offering both speed and reduced risk in execution once formally credit approved. Some 111 unitranche deals were tracked in 2015 across a wider spread of geographies (against 69 in 2014), 72% of which were provided on a bilateral basis, with an increased willingness of the larger, more mature funds to structure single tickets up to about 300 million. Recognising the increased penetration from private debt funds, certain banks, including Bank of Ireland, Lloyds and Macquarie, have rivalled the private debt funds in 2015 by also participating in larger unitranche deals tracked in the survey. At the same time, following
as of January 2015, £32.4 billion was still owed to the UK’s 5.3 million SMEs, demonstrating that there is still much to be done to remedy this issue. Furthermore, results of the Hilton Baird Late Payment Survey claimed that, as a direct consequence of late payment, one in ten British businesses had to turn away new business, confirming the findings of an Intrum Justitia report which discovered that 36% EU business believed their very survival was threatened by late payment. So what lies ahead for businesses in terms of late payment regulation, and what can be done in the meantime to safeguard against it? Calls for a Culture Shift When the LPD was first introduced in 2011, it was accompanied by an awareness campaign which was intended to inform businesses in all EU member states about the new rules regarding late payment. The success of this campaign is disputed. The Intrum Justitia report found that only 19% of those working in the Public, Education and Healthcare sectors had heard of the EU Late Payment Directive, with only 4% claiming they have seen a positive impact. Similarly, in the Real Estate sector, less than a quarter of businesses surveyed (24%) had heard of the directive and only 12% had seen a positive impact. Furthermore, the Ex- Post Evaluation study claimed that, even if the campaign did raise awareness, it was
several bank-fund tie-ups announced in 2014, we have seen an increasing number of partnerships between banks and funds, (e.g. Royal Bank of Scotland’s alliance with Hermes, AIG and M&G Investments or the informal partnership between Barclays and Ares Management) to further increase firepower, execution speed and mutual capital deployment in a competitive market. Increased competition has also come from the entry of several new funds during the second half of 2015, seeking to serve particular niche markets, particularly at the smaller end of the mid-market. Interestingly, the geographic spread of unitranche lenders has increased, with funds penetrating regions previously dominated by local banks such as Iberia, Benelux and the Nordics.
not ignorance of the rules that was the problem. It’s an active dismissal of the rules as the result of a prevailing business culture which sees smaller suppliers suffer at the hand of power imbalances, where larger companies impose longer payment periods: “…tolerating late payment against the promise of future business is often a rational choice... this combination of incentives makes it very hard for policymakers to tackle late payment.” Nowhere is this more obvious than in the Manufacturing sector. According to the Intrum Justitia report, 58% of manufacturing companies claimed their customers intentionally pay later than agreed, with 59% admitting that they have been asked to accept longer payment terms than they feel comfortable with. The latest Tesco scandal, uncovered by the Groceries Code Adjudicator, saw this supermarket juggernaut intentionally delay payment to smaller suppliers in order to boost their bottom line and placate investors. This is a great example of this issue and, having been met with much criticism from the media, could this possibly signal a change in mind-set? Recommendations from the Ex-Post Evaluation suggested that, if any awareness campaign was to be run in the future, it should be one aimed at making late payments a “socially unacceptable” practice in all member states. In light of this, it seems that it may be down to small businesses themselves to ensure that they protect themselves against late payments, rather than relying on
legislation to do the job for them. Make Payment Easier A report entitled Size Matters: the late payment problem, published in 2011, claimed that 80% of B2B transactions are based on credit. It is the inability of small businesses to pay their suppliers, before being paid by the customer, which can cause the cash flow issues that result from late payment. A possible reason for this could be the time it takes for cheques to be processed. As part of the Small Business, Enterprise and Employment Act, which was passed March 2015, it was agreed that electronic imaging of cheques can now replace cheques’ physical presentment. When the policy was first suggested, a consultation was run concluding that “both large and small businesses benefit from paying in cheques remotely.” The consultation reported that cheques still accounted for a quarter of outgoing payments from small businesses, micro businesses, sole traders and charities, with 66% of the latter’s donation values coming from this channel of payment. While faster clearing times will no doubt positively impact those who still use cheques, more can be done to reduce time taken for payment, even if it is just by a day or so.
Looking to the Future In order for the UK economy to expand and recover fully, businesses need to continue growing. Capital investment and the ability to recruit more staff is key to achieving this. In the most recent Small Business Finance Markets report from the British Business Bank, it suggested that one of the main challenges still facing the UK economy was a lack of small business ‘up-scaling’, with OECD data showing that many small businesses in the UK are still failing to grow by more than 10 employees after three years. Despite the report claiming that 56% of small businesses they spoke to were intending to grow in 2016, it is this lack of recruitment ability that remains a sticking point. Late payments pose a huge threat to job creation with over a third (37%) of Business and Professional Services sector businesses surveyed by the Intrum Justitia report claiming that recruitment is “largely hindered” as a direct consequence. Worse than that, one in five are considering laying off staff due to cash flow issues. In the Construction industry, 41% of respondents claimed they would definitely
or probably hire more staff if their customers paid faster. Despite low interest rates, capital investment also remains limited with 77% of those in the Leisure, Hotel and Restaurant sectors insisting that they had seen no impact at all on R&D or operational asset investment as a result of the unusually low rates. In Telecommunications, Media and IT, 73% claim that there has been no effect on their ability to finance growth. It is clear that much more needs to be done moving forward to protect small businesses against this sorry state of affairs, but what can businesses themselves do in the meantime? Be Proactive Switch to faster and more efficient payment methods, as mentioned above, and ensure you have a robust credit management system in place. This should allow businesses to defend themselves against payment gaps. Be More Authoritative Implement swift reminders and charge interest on late payments where possible. By acting immediately, and with confidence, businesses may start to see a shift in the prevailing business culture resulting in long-term benefits for the 99% of UK businesses that fuel this economy.
Mike Hutchinson from Bacs, in a press release entitled “Late payments costing SMEs billions”, urged businesses to “look at automated payments like Direct Debit to reduce the time and money that companies are spending to recover payments due to them.” Louisa Buckingham of Direct Debit and payment processing solution provider, First Capital Cashflow, agrees, commenting: ”The benefits of paperless Direct Debits are numerous; it cuts down administration and postage costs and reduces processing time and error rates, all resulting in faster payment times and fewer unpaid invoices.” She continues: “SMEs need to protect themselves from the consequences of late payment, and one of the best ways to do this is through having full visibility and control over cash flow. Simplifying reconciliation will not only aid efficiency, but it will also boost business relationships as the room for error is minimised.”
FINANCIAL SERVICES SECTOR AIMS FOR CULTURAL CHANGE Companies in the financial services sector are increasingly investing in specialists to help them drive cultural change in their organisations. Leading talent mapping and pipelining specialist Armstrong Craven is working with a number of clients in the sector, which are keen to widen their focus beyond gender diversity targets. The shift in emphasis towards deeper cultural change was highlighted in this week’s Gadhia Report which recommended a series of positive actions the financial services sector can take to improve inclusion in the workplace. These included providing technology that supports flexible working, ensuring pay structures are transparent, implementing good flexible working practices and investing in supportive people managers. Rachel Davis, Armstrong Craven’s Deputy CEO, said: “Gender diversity has been a major priority within the financial services sector for some time and last year’s Davies Report ensured it remains at the top of the HR agenda. “A number of banks are already targeted with providing a diverse candidate slate for every hire with KPIs linked to bonus. This is increasingly being extended to include line managers as well. “Where we are seeing a lot of interest at the moment is around the need for insight to help firms take a much bigger step and actually change the culture of their organisation. “For example, a lot of the issues previously facing women in the workplace now apply to parents – irrespective of gender – and those who care for ill or elderly relatives. Similarly, there is the need to ensure great inclusion for the LBGT community. “The work we do helping organisations have a more diverse culture also extends to diversity of thought – ensuring businesses embrace people from different sectors and backgrounds. “The financial services industry is still some way behind consumer organisations, but there is serious evidence that an industry dogged by a reputation for previously fostering a macho culture is committed to change.” An example of Armstrong Craven’s diversity work saw it partner with a global financial services client which was struggling to attract and retain female leaders in corporate roles. The firm engaged with over 200 senior female professionals to understand their career drivers and the challenges they faced. They also captured views on the client as a brand and a prospective employer. The result was a research report that informed the client about how it could become a more attractive employer to the targeted cohort. The organisation responded by implementing a number of changes to its employee proposition to improve its prospects of engaging with and attracting the best talent. Armstrong Craven’s work included building a pipeline of senior females for immediate and longer-term recruitment.
DATA LOSS JEOPARDISING AND DELAYING UK M&A DEALS
conduct your Q&A could lead to breaches of confidentiality and information around negotiations being leaked. Keep your Q&A in one secure and auditable environment.
Ansarada research highlights security challenges facing industry
Ensure you implement your document security and permissions before bidders enter the data room. Planning enables a seamless bidder experience and allows you to keep complete control of your documentation. To prevent document leaks, ensure that deal documents have a dynamic watermark on them which keeps individuals accountable for the security of the documents in their possession.
According to research and reports by Ansarada, almost three quarters (71%) of UK executives involved in M&A admitted that their deals have been delayed due to a loss of critical data. This includes the temporary or permanent loss of information located in documents, emails, devices and IT systems. The industry research, carried out by Ansarada, a dedicated virtual data room provider for M&A deals, found that these data losses accounted for deals being delayed by an average of 12 days. The research also found that more than one in 10 dealmakers (11 per cent) were not certain that their data was secure while trying to close deals during 2015. Ansarada’s research, which asked 520 bankers, lawyers, consultants and accountants specialising in M&A, highlighted the barriers faced by the industry when it comes to closing deals efficiently and on time. With the most recent figures (2014) suggesting that 339 deals worth £256bn collapsed – the highest number since 2008 – Ansarada is highlighting how the industry can reduce delays in M&A activity. “Considering the sensitive nature of M&A deals, it’s alarming to think that ‘data-loss’ remains such a big issue for the industry,” says Stephen Dearing, MD of EMEA, Ansarada. “With recent advancements in technology and security policies, dealmakers should be in complete control of the information they need to close a deal efficiently and to a tight deadline.” To help the deals across all industries remain secure and on track, Ansarada offers four top tips for dealmakers Box out for editors How to make sure your deal stays on track and secure: Make sure you run your Q&A process through the data room. Using emails to
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M&A: PAUSE FOR BREATH OR PLATEAU? First quarter 2016 M&A remains strong but sees lower volumes and a significant drop in market performance. The number of M&A deals completed* in the first quarter of 2016 was the lowest for two years according to Willis Towers Watson’s Quarterly Deal Performance Monitor (QDPM). The research, run in partnership with Cass Business School, shows that despite the fall in completed deals over $100m this quarter (174) compared to 233 in Q1 2015 (and 307 in Q4 2015), financial outperformance for companies completing M&A deals remains positive at 2.6 percentage points (pp) above the MSCI World Index. However, this is still significantly below the three-year rolling average of 5.8pp, and last year’s Q1 figures of 3.2pp. A regional breakdown of M&A deals shows Asian acquirers have maintained the top spot in the performance league, with their outperformance of 22.9pp above their regional index. Acquirers from Europe outperformed by 5.5pp above their regional index, but have declined in the last two quarters, and are followed by North American acquirers which underperformed their index at -3.1pp. This is the first time North American acquirers have underperformed for two consecutive quarters since the same period in 2012.
Steve Allan, Human Capital M&A Practice Leader (EMEA) at Willis Towers Watson, said: “North America’s underperformance could be the sneeze that starts a worldwide M&A cold, however it could be just a regional phenomenon. The research shows an apparent correlation between US election years and M&A underperformance in the first two quarters; this having also occurred in both 2012 and 2008. Deal completion volumes traditionally drop off in the first quarter of the year so it is no surprise that we are seeing a drop from last year’s record levels. It is therefore an open question whether the drop in volumes and the drop in North American performance figures signals a true downturn in the M&A market performance, or just a reflection of the uncertainty currently seen in the region and where we are in the annual deal cycle.” According to the research, cross-border, cross-regional and cross-sector deals outperformed the index** by 4.9pp, 4.9pp and 3.3pp respectively compared to domestic, intra-regional and intra-sector outperformance of 0.4pp, 1.7pp and 2.6pp respectively. In addition, quick deals in Q1 2016 underperformed compared to Q1 2015, whilst the outperformance of slow deals nearly doubled from 3.2pp Q1 2015 to 5.9pp this quarter. Steve Allan said: “The outperformance of the cross-sector, cross-border and crossregional deals compared to domestic deals, shows that those prepared to be bold are still reaping the rewards. But quick deals, traditionally those that are domestic or intra sector, creeping into negative performance could serve as a warning sign for those looking for industry consolidation opportunities.” According to the QDPM research, the number of mega-deals (over $10 billion) is up in Q1 2016 with six deals completed compared to four in Q1 2015, an all-time high for any first quarter since our analysis began in 2008. Steve Allan said: “Mega deal M&A activity has increased unabated with deals closing despite the economic turmoil. But as deal volume overall decreases, it will be interesting to see if the drop in smaller deals is a leading indicator that we are reaching the crest of the M&A wave. While M&A activity remains high, it is too early to say if we have just paused
for breath before an upturn in Q2 or if we have reached a plateau in activity and are at a turning point. Either way with M&A deals still outperforming the world index, acquisitions are likely to remain an attractive growth strategy for many companies in the year to come.” Willis Towers Watson QDPM Methodology · All analysis is conducted from the perspective of the acquirer. · Share-price performance within the quarterly study is measured as a percentage change in share price from six months prior to the announcement date to the end of the quarter. · All deals where the acquirer owned less than 50% of the shares of the target after the acquisition were removed, hence no minority purchases have been considered. All deals where the acquirer held more than 50% of target shares prior to the acquisition have been removed, hence no remaining purchases have been considered. · Only completed M&A deals with a value of at least $100 million are included in this research. · Deal data sourced from Thomson Reuters. *Completed M&A deals with a value of at least $100 million. **MSCI World Index is used as default
MANAGING PROPERTY IN THE M&A LIFECYCLE Tom Carroll, Director – EMEA & UK Corporate Occupier Research, JLL Mergers and acquisitions are vehicles designed to drive efficiency and add value yet many major deals fail to properly account for a crucial component: property. As the second largest cost on corporate balance sheets, real estate should feature high on the M&A deal agenda but new research from JLL shows that one-in-five fail to take property into consideration until the agreement is signed. This can result in additional risk, unforeseen cost and strategic misalignment. Mitigating real estate risks
Effective real estate management can be a highly efficient way to maximise value from M&A and mitigate these unforeseen risks. But all too often, property is assessed in the latter stages of negotiation and this presents multiple problems. Instead, real estate strategy needs to be involved from the beginning of the M&A process and considered within the deal strategy at key stages. By understanding the detail of the property portfolios both the acquiring and target company can make strategic decisions about deal structure with full transparency. At JLL, we recently published a report called Successful M&A: capturing value through real estate and our research shows that 76 percent of companies involved in a merger or acquisition over the past five years claim to consider real estate an important or critical factor. However, during the interviews we conducted it was clear that in a large number of cases a comprehensive review of property had not been conducted prior to the deal. Many businesses used the phrase ‘skeletons in the closet’ when talking about the costs, risks and unfitfor-purpose property strategies, which were only discovered after closure. These then went on to cause long-term value problems in the new organization. How and when real estate creates value Having a proper real estate strategy in place creates value in a number of important ways. If real estate is integrated into the due diligence stage, risks associated with a company’s commitments can be identified and quantified. Crucially, understanding these risks can help influence negotiations. The danger is often not in the operational portfolio but in the non-operational portfolio. For example, some companies have mistakenly become locked into long lease terms when they thought they were taking on owned or freehold property. If they had studied the portfolio’s details properly in advance, they would have realized that the acquired company had done a sale-and-lease-back in advance of the deal. Meanwhile, carrying out a comprehensive assessment of property commitments at the due diligence stage allows
opportunities for cost-optimisation to be found. These opportunities, in turn, can help companies maximize the overall return on investment. From portfolio benchmarking to more accurate valuation and forecasting, there are a range of tools available which help companies measure, anticipate and avoid unnecessary costs within the M&A process, without impacting deal timelines. Making real estate count Ultimately, a more robust real estate strategy ought to resonate with an investors’ appetite for efficiency as a real estate strategy that is aligned to the deal strategy can accelerate both operational objectives in an M&A transaction and business continuity after closure. Issues such as talent retention can benefit hugely from properly managed property portfolios as they change hands. Real estate can also be used to help establish a new corporate identity and collaboration between employees from both companies. Effective resourcing is another crucial prerequisite to success. Planning in advance, robust processes and a blend of internal and external real estate expertise is usually the most effective way to ensure a good outcome. Deal confidentiality protected Although conventional wisdom dictates a preference for dotting the ‘I’s and crossing the ‘t’s’ with as few people present as possible, widening an M&A team to include property experts poses no risk to deal confidentiality. There is no reason why robust risk management and confidentiality frameworks can’t apply to real estate just as they would to financial or HR teams and no logical or structural reason not to bring real estate in early on and extend these processes to them. In fact, our M&A survey shows that ‘best in class’ companies provide insights across all facets on the deal at the right points in time. Ultimately the timely provision of comprehensive data and insight on real estate portfolios in the due diligence phase means a more robust business case and better assessment of the financial, operational and business continuity risks associated within the M&A process.
HOW YOUTUBE IS CASHING IN ON ITS WEIRDEST AND WILDEST COMMUNITIES… UNBOXING? FOOD COLOURING? PIMPLE POPPING?
videos that contained a quality of “French flair” to advertise for the Macy’s women’s apparel brand Maison Jules. (They also “conquested,” a term for advertising against your competitors, alongside videos about J. Crew and Madewell.)
Since it launched over a decade ago, YouTube has been home to all manner of esoteric, highly specific video. Toy unboxing videos come to mind, or the can’t-look-away medical horrors of Dr. Pimple Popper.
It worked, according to Justine Bloom, an executive vice president at the company. “The data shows when we get to that level of specificity you see all sorts of lift in brand lift, intention to purchase, and consideration of the brand,” she says.
As reported by Fortune, increasingly, YouTube has been pushing advertisers to take advantage of these niche categories. With one billion users, YouTube has more scale than any pure-play video platform in the market. But the fast rise of Facebook’s video operations has created competition. Facebook has a big advantage in the amount and types of data it has on each user, meaning it can create highly specific audiences for advertisers to target.
Carat client Adidas has used YouTube to target obsessive “sneakerheads” who watch tons of unboxing videos, where people record themselves taking new purchases out of the box for the first time. “They think about [the Adidas brand] differently than a basketball fanatic,” Bloom says. “We segment consumers into attitudinal, mindsetbased communities and align our creative with the passion and the context.” That works better than the default target demographic of “boys, age 14 to 20,” she adds. An obvious place for advertisers to go big on niche markets is autos. Viewers watch 2.6 million “drifting” videos a day, for example. “It’s mind-blowing because the community is so big and it’s mostly uncharted,” Zefr’s Rosner says. “The ability to find that relevancy with this level of granularity is new. [Advertisers] aren’t used to being able to slice and dice those audiences and tap into those communities at scale”
That’s why YouTube likes to promote its creators and their channels. To target based on the actual content of the videos, YouTube relies on third-party companies like Zefr, a Los Angeles ad-tech startup. Advertisers are eager to target niche communities, according to Dave Rosner, Zefr’s executive vice president of marketing. There are 1,679 YouTube videos about food coloring and people watch them an estimated 1.2 million times a day. There are more than 53,000 nail art videos with 1.5 million daily views and 315,000 “outfit of the day” videos with 2.5 million daily views. YouTube boasts more than 19,000 BASE jumping videos (where a person parachutes off of something) and they’ve been viewed nearly 600,000 times, according to Zefr. That’s how CoverGirl is targeting Star Wars fans with makeup tutorials and Toyota is targeting outdoor enthusiasts with volcano hopping videos. Carat, a media agency that works with Fortune 500 companies, identified style
YouTube is touting these microcommunities ahead of the NewFronts, a series of advertising sales events held in New York each spring. At YouTube’s 2015 NewFront presentation, CEO Susan Wojcicki highlighted YouTube’s homegrown stars and “Google Preferred,” its program that identifies the best YouTube creators and sells premium ads alongside their videos. Even with increased competition from Facebook and Snapchat, YouTube’s biggest selling point echoes that of parent company Google: It has intent. “You go onto YouTube because you’re looking for something, like how to fix a toilet, or a tour of the next Ferrari, or an unboxing of a Louis Vuitton handbag,”
IS APPLE HEADING INTO A ‘WHITE KNUCKLE PERIOD?’ MAYBE. MAYBE NOT.
Apple may be in for some trouble, but things will eventually get better, one analyst says. As reported by Fortune, in a note to investors on Monday, Daniel Ives, an analyst with FBR & Co., says that investors will be forced to deal with a “white knuckle period” in the coming months. He argues that while Apple’s investors have faced “a miserable, dark period over the past few months,” there are no signs of it slowing down anytime soon. “With panic around China yet again rearing its head and [iPhone] 6s demand less than stellar, many on the Street are now worried that Apple’s growth story is in the rearview mirror and tougher days are ahead as China remains the main fuel in Apple’s growth engine going forward,” he wrote to investors. Indeed, there is growing concern among investors and analysts that, perhaps, Apple is not as healthy as it once was. As Ives notes, China is Apple’s biggest market, accounting for nearly a quarter of its $51.5 billion in revenue in the lastreported quarter. Meanwhile, its iPad business has been in decline and there have been nagging rumors that demand for the iPhone 6s is not as strong as Apple had anticipated. In December 2015 several analysts, including those at Morgan Stanley, JP Morgan, and Barclays, said that Apple had reduced component orders on the iPhone 6s and iPhone 6s Plus. On average, analysts have predicted a year-over-year iPhone shipment decline of 15% in the quarter ending in March. For his part, Apple CEO Tim Cook has not shied away from the naysayers’ comments, arguing last year on several occasions that the iPhone is performing above expectations and even his company’s iPad has a longer “runway” than some may believe. Still, Cook is facing some headwinds. The Dow plunged more than 400 points in January 2016 over concerns that the Chinese market is slowing and its manufacturing industry is grinding to a halt. If China is in trouble – a belief that is disputed by economists – it could spell bad news for Apple, Ives and his fellow analysts argue. Meanwhile, Cook and his team are expected to increase iPhone shipments, despite an unfavorable hardware comparison. The iPhone
6, after all, was a major upgrade that featured a new design and bigger screen than the iPhone 5s, along with the launch of the iPhone SE – that resulted in massive demand and record-breaking revenue for Apple. The iPhone 6s is a nominal upgrade over its predecessor, and analysts have acknowledged that the iPhone 7, which is rumored for launch in late 2016 / early 2017, is the major upgrade consumers are waiting on. Looking ahead, however, the white-knuckling at Apple won’t last long, Ives says. While he acknowledges that Apple is undergoing some turbulence, he believes the markets generally bearish view on Apple’s future (shares are down 17% in the last six months) is overblown. Ives says in his note to investors that Apple likely had a “relatively strong” holiday quarter, and while it may have to weather some downbeat quarters in 2016, “the mega iPhone 7 product cycle” set to kick off in September could be enough to turn things around. “While [iPhone] 6s demand has not been stellar out of the gates relative to bullish Street expectations, we believe this near-term product transition period will ultimately lead to brighter days ahead on the shoulders of the flagship iPhone 7 release,” Ives writes. He estimates 30% of iPhone owners have upgraded to an iPhone 6 or iPhone 6s, providing the company with “a massive green field opportunity” to sell boatloads of iPhone 7 units. “The reality is that this interim product cycle should still help Apple hit roughly 220 million+ iPhone unit sales for 2016, a still commendable achievement for a “S” product cycle, and thus help lead to the drum roll for a robust 250–255 [million] iPhone unit sales number in 2017 on the heels of a much anticipated iPhone 7 cycle,” Ives wrote. But what about the rest of Apple’s business? According to Ives, there’s a possibility that Apple may try to jump-start some of its slower divisions by using its more than $200 billion in cash to fund an acquisition. While he wouldn’t say which companies may be in Apple’s crosshairs, he thinks the company could make “larger, strategic technology acquisitions” this year to boost its “footprint” in consumer and enterprise markets. In other words, those knuckles may get some relief sooner than some think.
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BEHIND THE BRAND
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“SAFETY, CONVENIENCE AND RESOURCE EFFICIENCY” “Bosch has always sought to lead the market with innovative technology that makes a difference to people’s lives.”
BEHIND THE BRAND
BEHIND THE BRAND
Q. Will you to tell our readers about Bosch and how it got to where it is now… The Bosch Group is a leading supplier of technology and services. The company was originally set up in Stuttgart in 1886 by Robert Bosch as “Workshop for Precision Mechanics and Electrical Engineering”. 130 years later, Bosch employs roughly 375,000 associates globally and has generated sales of over 70 billion (£53billion) in 2015. The Bosch Group is made up of Robert Bosch GmbH and around 400 subsidiary companies spanning across 150 countries. In the UK, Bosch has been present since 1898, when Robert Bosch opened the company’s first office outside Germany. Every one of the Bosch Group’s business sectors has a presence in the UK: Automotive Technology, Industrial Technology, Consumer Goods, and Energy and Building Technology. Bosch UK employs around 5,100 associates across 41 sites. In 2014, Bosch generated revenues in the UK of 1.9 billion euros.
Q. Within 3 sentences, how would you describe Bosch’s presence in this fast paced world? Our product scope can be characterised by the words: Safety, Convenience and Resource Efficiency Bosch is the only global organisation that works across all three elements of the internet of things: sensors, software and services. Furthermore, because Bosch works across so many sectors implementing elements of connectivity across each of them, it is set to be a key player in the connected world.
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Q. As the world’s leading engineering and electronics supplier, Bosch technology is used in most households, businesses and on the road. What professional moves enabled this prestigious status? When Robert Bosch first started the company, he insisted on creating products that were built to the highest standards, refusing to compromise on quality. This set the foundations for a company that, 130 years after it was founded, continues to manufacture products that stand for technical perfection and reliability. What’s more, Bosch has always sought to lead the market with innovative technology that makes a difference to people’s lives. Whether it’s the Indego Connect automated lawnmower, one of its driver assistance systems or a Bosch Smart Home controller, this remains Bosch’s ethos.
Q. Looking at Bosch’s four divisions: Mobility Solutions, Industrial Technology, Consumer Goods, and Energy & Building Technology - what are the prime areas most recently and in history for Bosch? Connectivity is the prime area for Bosch and is present across each of the four divisions. In mobility solutions, this means the automated car, intelligent driver assistance systems and, in time, the fully automated and connected vehicle. For industrial technology, this manifests itself in Industry 4.0. When talking about consumer goods, the future lies in the smart home, appliances that can be operated and monitored from anywhere at any time. Energy and Building technology incorporates all of these other areas, ensuring ultimate efficiency and minimum energy consumption in business and the home.
BEHIND THE BRAND
BEHIND THE BRAND
BEHIND THE BRAND
Q. What are the potential growth areas? One area that is becoming increasingly significant is software expertise â€“ particularly for IoT (Internet of Things) connectivity. Bosch is leading connectivity trends in many sectors. The company is the global market leader for micromechanical sensors (MEMS) for both the consumer electronics and automotive markets. We have also been extending software competence for some years now. The Bosch Group now employs more than 15,000 software engineers with 3,000 experts working on the Internet of Things alone. Last year, Bosch opened a new research facility in Renningen, neat Stuttgart, which will be a hub of sensor and software development for years to come. Bosch especially sees huge business potential in the services that will arise as a result of connectivity.
Q. From automotive steering assistance to solar inverters, what are the biggest technology innovations Bosch has achieved in recent years? With over 5,400 patents filed in 2015, Bosch creates innovation on a daily basis; 22 to be exact. The development and mass production of MEMS sensors is a major development for Bosch, we currently hold more than 1,000 patents and patent applications relating to MEMS technology. 4 million sensors are produced daily and since 1995, we have produced over six billion MEMS sensors from our state-of-the-art wafer fab in Reutlingen, Germany. Todayâ€™s vehicles feature more than 50 MEMS sensors alone, while three out of four smartphones have Bosch sensors in them. We also have applications in developing consumer electronics products, such as virtual reality and wearables as well as connected cars. With the advent of the internet of things, a future is in sight where almost all objects are aware of their surroundings and sensors are the main facilitator of this. At CES 2016, Bosch unveiled its next generation of sensors, which offer greater levels of precision, ease of use and efficiency. Another core development is the Smart Home System, this is essentially the glue that holds the connected homes together, controlling and connecting all smart elements from a single platform, such as heating, security, air quality and lighting. Not only does it allow Bosch systems to integrate, it is also compatible devices from other suppliers. For example you can control Phillips Hue wireless lighting and adjust them to personal preferences and moods. All connected devices in a home can be operated via smartphone or tablet with a single app.
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Q . Is there any research and developments so far this year that we’ve not seen elsewhere in the engineering or technology industries; that is unique to Bosch? The Consumer Electronics Show (CES 2016) in January saw a number of new and unique technologies launched by Bosch. Bosch won the CES Innovation Award for the introduction of its new haptic touchscreen. While looking like a conventional touchscreen, this innovation allows drivers to feel their way around the screen using haptic feedback. This means drivers no longer have to look at the screen, reducing distraction. We also released a new generation of sensors for consumer electronics including the latest new acceleration and yaw-rate sensors, an environment sensor solution, a development platform for internet of things (IoT) applications and the world’s first retrofit emergency call service adapter for cars, which is available in 16 languages and over 30 countries. More recently we launched a connected accelerator pedal, which uses haptic feedback to reduce fuel consumption and improve safety. The innovative new system gives gentle vibration alerts through the accelerator pedal, thereby notifying the driver. It is connected with the vehicle’s assistance and navigation systems to warn the driver about potential accidents and fuel consumption
Q. Earlier this year Bosch recorded that sales had risen by 6.3% in 2014, what can you tell us about 2015 as a year? We have recently released our preliminary results for 2015 and have seen sales over 70billion (£53billion) for the first time. It was a positive year for Bosch. Numerous acquisitions have left us in a stronger position and have helped us to expand our product portfolio, establishing us in the specialist technology market. In January 2015, Bosch announced the acquisition of Climatec. Climatec is an independent provider of services for the integration and automation of essential building systems including power generation, air conditioning and security. The company can offer consulting, planning, installation, and remote maintenance from a single source, and is active across widely differing sectors. Our first project in 2015, at a college in Bracknell, was very successful and we continue to build on that success. Bosch has also founded a joint venture with the Chinese technology company Midea to produce variable refrigerant flow (VRF) systems. These systems employ variable flows of refrigerant to provide commercial buildings with heating and air conditioning. Bosch Packaging Technology, a leading supplier of process and packaging technology, acquired KliklokWoodman Corporation, based in Decatur, Georgia, but with a manufacturing site in Bristol, in September 2015.
BEHIND THE BRAND
BEHIND THE BRAND
BEHIND THE BRAND
Q. Asia Pacific also saw an incredible 17% jump in engineering sales last year, do you feel this was impacted by Indiaâ€™s growing partnering with the automotive industry? Bosch is forecasting strong growth over the next few years for India. The company expects to see positive development in the country over the medium and long term. Over the past ten years, Bosch has more than tripled its sales in India, generating 1.2 billion euros in 2013. The company currently employs more than 29,000 associates at eleven manufacturing and development sites. Since 2010, the Bosch Group has invested around 680 million euros in the expansion of manufacturing and research facilities in India, including some 160 million euros in the past year alone. Presently, Bosch in India has over 14,000 research and development engineers. In 2015, the Bosch Group in India filed for more than 200 patents. However, other markets in Asia are also contributing to this considerable growth: these include South Korea, China and Japan. In Asia Pacific, Bosch recorded sales growth of 16% to 19.1 billion euros.
Q. What challenges has Bosch faced in the recent year? Bosch has a history of being a market leader of cutting edge technology, and with the world becoming increasingly connected, technology is changing at a breakneck pace. Bosch is determined to stay ahead of the game but recognises we have to make changes to the way our business operates. Last year, we opened a research campus at Renningen to encourage interdisciplinary collaboration and to enhance our strength in innovation. At the new centre for research and advanced engineering on the outskirts of Stuttgart, some 1,700 creative minds are doing applied industrial research. The Renningen campus will help Bosch deliver even more innovations that improve quality of life. The campus brings together many disciplines from science and technology.
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Q. How would you describe Bosch’s relationship with its suppliers? Bosch carefully selects all of its suppliers, to make sure they meet certain criteria. The selection process ensures that we have the highest quality throughout all of our products. We also like to nurture our relationships with our suppliers, ensuring we can continue to use the best of the best. We have longterm relationships with almost all of our suppliers.
Q. It’s clear that Bosch recognises the importance of the supply chain, can you tell us more about your Supplier Awards programme? The Bosch Global Supplier Award honours our top suppliers, who play such a key role in Bosch’s success. Our suppliers are important partners in helping us shape the connected world. We want to work with them to develop beneficial solutions for our customers. We believe that long-term partnerships and the early involvement of suppliers has been the key to our success; that is why we feel it is important to recognise our suppliers in this way. 2015 saw Bosch recognise 58 of its top suppliers at the 14th Global supplier awards. By presenting this award, we recognise the outstanding performance in the manufacture and supply of products and services, notably in the areas of quality, costs, logistics and innovations.
Q. Bosch gets a lot of buzz. What are the elements in creating its success? Are there any essential suppliers or processes that enable this? Like any business, Bosch is only as good as the people behind it. To make sure we stay at the top of our game, Bosch invests heavily in the development of its associates. For Bosch, associate development is a continuous process that requires a willingness for lifelong learning. Associates are encouraged to actively develop new skills while maintaining their current expertise. This is something that is at work across the company– regardless of job role, hierarchical levels, or locations within the Bosch Group. Bosch is also trying to address the skills gap in the UK and supports various initiatives across the business to promote engineering across different age groups.
BEHIND THE BRAND
BEHIND THE BRAND
BEHIND THE BRAND
Q. Bosch has a crucial presence at IAA, what were the highlights this year? Mobility Solutions is one of the key sectors for Bosch accounting for 60% of our group sales. So it traditionally delivers a number of innovations in this area each year. In an industry that is increasingly working towards greener cars, Bosch launched a new 48-volt hybrid system that will see hybrid powertrains become more affordable and compatible with smaller vehicles. The intelligent system costs a fraction of those currently on the market. Battery technology will play a key role if electric cars are to become even more widespread, therefore Bosch acquired the U.S start-up company Seeo, Inc. With the purchase, Bosch now possesses essential know-how in the area of innovative solid-state cells, with this Bosch sees the potential to increase the energy capacity of lithium-ion cells even further. Bosch also launched a Traffic Jam Assist System which is based on the sensors and functionality of ACC Stop & Go and of the lane-keeping support. Up to a speed of 60km per hour the system automatically follows the vehicle ahead in heavy traffic. Not only does the traffic jam assist accelerate and brake, it also keeps the vehicle in its lane by way of steering interventions.
Q. Bosch made an incredible move in engineering history this year with the Home Zone Park Assist, what successes have you seen so far from this? As the industry moves further towards automated driving, the market for driver assistance systems is already expanding. In this market, Bosch is increasing its sales by one-third each year. Last year was the first time that the company sold more than 50 million environment sensors for driver assistance systems. Unit sales of radar and video sensors doubled in 2015, as they did in 2014. This year, a series of new systems will go into production at the company. These assistance systems help drivers in traffic jams, when taking evasive action, and when parking by remote control. The Home Zone Park assist enables drivers to have their vehicles park and exit parking spaces themselves, automatically. Remote parking assist is now being seen in a number of premium new cars and, as its popularity increases, we expect to see it filtering down through more mainstream cars.
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16. Manufacturing innovation has seen the launch of Platform Industry 4.0? Can you tell us more about this and what it will mean for future manufacturing? Bosch sees tomorrow’s production as smart, flexible, and connected. Connected, automated manufacturing increases companies’ competitiveness and also allows them to produce very small batches or even individually customised products. Industry 4.0 allows you to do this. Bosch automated production assistants that make manufacturing flexible and efficient have been designed especially for use in Industry 4.0 applications. They offer powerful support in automated production. The assistants take on strenuous and dangerous tasks but also monotonous ones. For example, they can join pieces together or unpack crates. This gives the human workforce more time for tasks that add value. Looking at the global manufacturing network for Bosch, we expect Industry 4.0 to save the company hundreds of millions of euros annually in the years leading up to 2020.
Q. How does Bosch’s relationship with the environment stand? Bosch invests heavily in developing environmentally friendly products. Half of the 6.3billion invested in R&D, in 2015, is spent on green technologies. By the time toddlers of today are in their thirties, global CO2 output will be 25% higher, and the World Health Organisation claims that global warming will cause 250,000 additional deaths by 2030. Because of Bosch’s heritage of majorityownership by a charitable foundation, we are working on a number of social and environmental initiatives to help combat this. Potential CO2 savings are highest in buildings and heating: buildings account for 40 percent of global energy demand, yet electricity accounts for only a small proportion of that energy. In industry, 75 percent of all energy used is in the form of heat. Over 84% of energy is lost before it reaches our homes and buildings. Bosch now offers an integrated, connected energy efficiency solution that enables industrial customers to achieve energy savings of up to 30 percent. Bosch has cooperated with leading thinkers at the Royal Academy of Engineering to develop an energy efficiency handbook for schools. In Worcester, Bosch has also commissioned the development of a play that aims to spark the interest of seven to eleven-year-old schoolchildren in green topics, helping to educate from a young ages what they can do to help the environment.
Q. What is Bosch doing to take on the impacts of climate change? Are there any new advances that have been implemented to reduce its carbon footprint?
To help combat climate change, Bosch has a range of smart technologies to make businesses more energy efficient – this is where a large amount of energy wastage occurs. Bosch is already implementing energy-saving technology at its UK facilities. At the plant in Glenrothes, Scotland, Bosch uses a combined heat and power unit that produces electrical power and recycles heat energy for increased efficiency, reducing CO2 emissions by 30%. Worcester Bosch’s new recycling scheme will save 71 million litres of water annually and twelve metric tons of CO2 – this corresponds approximately to the water consumption of 650 households. Since 2007 Bosch has reduced relative CO2 emissions globally by more than 20% thanks to energy-saving measures such as eco-friendly technologies in manufacturing and installation of efficient heating technologies in their own buildings. We have also saved around £375 million in energy costs through in-house measures between 2007 and 2014.
Q. Are there any prototypes in the pipeline for 2016 that will secure your position at the top? Bosch is working on a number of projects across all sectors that will ensure its position as a world leader in technology. So far, some of the technologies launched in 2016: s s s s s
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Q. What does the future hold for Bosch? Bosch’s future is connected. Thanks to our innovative strength, we will continue to drive new technology across multiple sectors including automotive and consumer electronics. An increasingly connected world also opens up new business opportunities and Bosch is developing new services on this basis.
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â€œGamechanger: A visionary strategist bringing fresh and unique ideas to the table, an individual or business that stands out from the crowd with ideas that inventively change the way a situation develops.â€?
Gamechangers Gamechangers 72 66
â€œGamechanger, what we define as an individual or business that aims to create a new model that leaves the older model obsolete. Gamechangers impact how the game is played from one objective and ruling model to a completely new vision â€“ changing the face of how we know something.â€?
ACHIEVING STRATEGIC VALUES FAR BEYOND FINANCIAL PREDICTIONS AVONDALE
INTANGIBLE ASSETS ARE FOR EVERYONE COLLER IP
WHY UNITRANCHE FINANCING IS REVOLUTIONISING CORPORATE LENDING REED SMITH LLP
THE PENSION/GROUP RETIREMENT SAVINGS INDUSTRY AND FINANCIAL PLANNING? WISE RIDDELL FINANCIAl GROUP
RESEARCH REVEALS FINANCE PROFESSIONALS ARE A HAPPY BUNCH AT WORK EMMA GLENNON, HEAD OF KEY CLIENTS AT ARGOS FOR BUSINESS Are finance professionals happy at work? Our research reveals that British employees, including ones in the financial sector, are, on the whole, happy at work, with a third feeling inspired to succeed every day and 70 per cent feeling positive about work more than three days a week. This counters a common misconception that we’re a nation of disgruntled employees pushing paper. What makes finance professionals feel valued at work? Our nationwide study found that 40 per cent of finance professionals think feeling valued in a job is a top priority, with 34 per cent saying recognition for their hard work actively motivates them. Tell us a bit more about the research… The study comes ahead of Employee Motivation Day 2016, a day created by Argos for Business to inspire passion and appreciation across the country’s workforce. The leading provider of incentive and motivational solutions is hosting this annual event to encourage all organisations to put motivation to the forefront of business thinking and champion creative ways of engaging staff. The study into the behaviours of the UK’s workers highlights that team dynamics play the most important role in employee satisfaction, with two-thirds of all workers enjoying being part of a team. The research examined how various personality types of teamworkers also take on very different roles. Businesses can thrive by encouraging a collaborative working environment that allows each personality type to have an impact – while there is no ‘I’, there is definitely a ‘me’ in team. Are there different personalities within the workplace and what are they? The most popular work personality is Captain Questions. A fifth of workers place themselves in this category, with exploring and problem solving what they most enjoy about work. These are the most likely candidates to call collective brainstorms to reach a decision and also the most likely to encourage free-thinking and offer thanks for all suggestions and input. The second most popular personality type is, conversely, Independent Introverts, with 15 per cent of employees making considered and informed decisions on their own before expressing them out loud, followed by Confident Creatives (11 per cent). Just over one in five employees will be a Big Idea Bod, understanding that it will be others in the group who make their ‘big picture’ thinking feasible.
Despite clearly being a nation of team players, the research reveals that 56 per cent of workers believe they themselves are their biggest motivators, suggesting a personal ambition to make an impact is driving workers. Perhaps this is why only a small group (one in seven employees) are People-Orientated Performers – those eager to motivate others instead of themselves. For this people-orientated performers, a third believed that even the smallest gesture of thanking people for their input goes a long way in motivating them to participate and, case in point, three quarters of workers remember a time they were verbally praised. A third of workers claim that simply encouraging collaborative working and allowing the different personality types to compliment each other is the best way to motivate employees. Does collaboration help with motivation in the workplace? 36 per cent of employees thought taking the time to listen to other ways of working helped increase levels of motivation. A quarter of employees also claim that being involved in decisions helps to boost positive attitudes in the workplace. Argos for Business is working alongside Roger Black MBE, three times Olympic medallist and motivational speaker, as part of ‘Employee Motivation Day’. Roger identifies himself as a ‘Captain Question’ within a team, encouraging free-thinking and offering words of encouragement to teammates: “In 1991, the British Team won a gold medal for the 4×400 metre relay team in the World Championships. In a brave move, we made a team decision to change the running order the night before the race, and that decision ultimately resulted in a gold medal. “By giving your team members room to brainstorm and make collaborative decisions about what they do, you will see an increase in engagement and a greater commitment to tasks – because they have made it their own. Argos for Business’ research showed that taking on responsibility was the main motivator for over a quarter of UK employees, and this resonates in the workplace, as well as the sporting arena.” Do you think it’s important for employers to recognise the different personalities within a team? The team dynamic findings are interesting as they show a delicate balance between working as a collective, while being self-motivated. This ‘best-of-both-worlds’ type of work ethos stimulates personal satisfaction and ambition, within collaborative and positive working environments. That’s not to say self-starters who need little motivation from others should be overlooked when it comes to incentives and rewards, however. Instead companies should acknowledge and reward them in ways that suit the individual. Ultimately, a one size fits all approach is not advisable, particularly when you consider how many personalities make up a team. Get involved in National Employee Motivation Day by downloading the motivation resource pack from www.employeemotivationday. co.uk, or by visiting the dedicated Facebook and Twitter pages, using the hashtags #EmployeeMotivationDay #EMD #MakeTheTeam and #NatMotivateDay.
For more information about Argos for Business please visit www.argosforbusiness.co.uk
AVONDALE ACHIEVES STRATEGIC VALUES FAR BEYOND FINANCIAL PREDICTIONS. Avondale are the UK’s leading M&A boutique specialising in the SME sector - achieving strategic values far beyond financial predictions. They provide unrivalled business sales, acquisitions and strategic growth solutions with a success rate second to none and are the Institute of Directors’ preferred provider and won 13 M&A industry awards in 2015. We spoke to chairman, Kevin Uphill, ACQ Game Changer of the Year 2015 and author of “Creating Competitive Advantage” recently published by Kogan Page about how he consistently manages to achieve success for clients and grew the practice by 25% last year. Q. Can you tell us more about yourself and your role at Avondale? I founded Avondale over 25 years ago and have enjoyed a long and successful career as an entrepreneur, strategist and business sales and acquisitions adviser. I’m passionate about business and its role in economic and social success. I have written 3 business books, the latest of which is “Creating Competitive Advantage”, recently published by Kogan Page. Q. How did you find yourself in M&A, what’s your history? I started my career at NatWest bank. This gave me an in depth finance, mergers and acquisitions knowledge. After identifying a niche in the commercial business sales market, I founded Avondale, and led the company to become the leading SME M&A boutique. To date I have personally facilitated the completion of around 300 deals. Q. What developments have you seen in the past three years? The past 3 years have been hugely challenging for all involved in business. We’ve been through the recession and are coming out other side. People are more risk adverse and take more care when buying businesses. We’ve seen more structured deals and deferred payments. Funding has also been harder to obtain, although that is improving. Sellers also sat on the fence during the recession; those that really want to sell are doing so now, and lucratively. However, the climate is also conducive for those entrepreneurs who wish to increase their business value prior to exit. Acquisitions have fueled M&A activity in the slow grow economy, as organic growth has been difficult. The PE market is driving multiples up as funds look for yields. Q. Will you tell us more about the processes you are applying this year… We are spending a lot of time working with business owners helping them to not only accelerate growth but also to gain competitive advantage – making them a must acquire asset for those wishing to conquer and rule the market.
Q. What are your 5 top tips for a successful acquisition? - Prepare – make sure you’re growth strategy is clearly defined so you don’t get swayed off course by the attraction of an acquisition that may not be right. Make sure you organisation is adequately structured to facilitate a successful merger. Ensure your capital investment requirements and funding facilities are realistic. - Carefully define your acquisition criteria. This will keep you aligned with your long term growth objectives and help you compare acquisition alternatives. - Fully understand the target company. Obtain as much information as possible, financials, client breakdown, staff, premises etc. - Negotiate and get the right deal. Ideally look for a win-win situations so all parties are happy. It is likely you will have to work with the seller for at least a year. Identify must wins and can lose items to win negotiations. Make sure you gain economies of scale, synergy and increased shareholder value. - Invest in integrating. This critical stage is often overlooked and it is here that many mergers fail. Put a plan together, cover all areas, and include key members of staff – including those that might not be obvious. Maintain motivation and communication. Q. 2015 saw huge developments and growth in the M&A market, what are your predictions for 2016? The UK has made steady economic progress but we still have a long way to go. The 2015 0.5% growth was disappointing in comparison to the projected 0.7%. Interest rates were due to rise early in 2016; this is now forecast later in the year with some economists predicting no change until 2017. Collapsing oil prices and volatility in China have caused a drop in inflation and a sluggish UK growth rate. The EU referendum and the Middle East crisis may also affect our route to recovery. All is not doom and gloom, we will continue on a path of momentum positive drivers should outweigh the negative and with the current pace of recovery, we should be in a position to navigate around the economic obstacles. Looking at M&A activity, we predict that activity levels will remain high. Interest rates will remain low, funding will remain readily available, the UK will continue to attract international buyers, growth by acquisition will stay the preferred route and confidence in the economy will continue to be strong all of which points to sustainable and increased M&A deal values and volumes. Whilst I have no crystal ball, everything points to a positive momentum in 2016. Sell or grow; whatever you do make hay while the sun shines. Most importantly, as Mark Carney (Governor, Bank of England), what’s important is to do “the right thing at the right time”. Plan and make sure you get it right.
Q. In your opinion what were the main factors driving the growth we saw in 2015? Confidence in the economy! M&A is often seen as a barometer of the economy and in 2015 was set fair to good. This was not only reflected in deal volumes and values, but also in the speed of transactions. During the recession deals were taking an average of c. 5 months from HoT (Heads of Terms) to completion, in 2015 this was more like 2-3 months with buyers eager to complete as soon as possible. A slow growing economy makes organic growth difficult. Expansion via acquisition is far easier and can be less risky. Low interest rates meant that companies and private equity funds with cash reserves were earning negative returns and turning to acquisitions as a way to invest money in growth initiatives. The banks’ efforts, over the past 7 years, in rebuilding their balance sheets and improving risk management are paying off. Corporate credit has recovered strongly and lending to small firms is growing meaning that funding is more readily available. All of these factors results in hungry buyers which in turn leads to higher values, multiples and sellers being happier to exit. Q. As a respected speaker and leader on business strategy, what’s the best advice you can give for buying a business? Get the buying criteria right, know yourself and where your strengths and weaknesses are. The best acquisitions are ones that offset your weaknesses. Look internally, which new products, strategic alliances, territories and recurring revenue could benefit your organisation? What do you need to get to reinforce your own shareholder value? Also important is due diligence, most people spend all their money on the commercial and financial due diligence. But the majority of transactions fail around the people and also the customer relationships. Increasingly we are finding the companies succeeding spend more time checking the cultural fit and also the customer relationship. Q. What unique ideas and solutions does your work have on your business? My passion for successful business has a constant impact on Avondale and our clients. I am constantly looking at ways to improve our services in my strive for perfection. Our game changing strategy division and constant developments are a clear reflection of this. Pioneering products such as virtual data rooms on smaller deals where this has not historically existed and value builder support for all sale projects as standard create a stand out position with genuine unique services. Q. What defines Avondale as a Gamechanger in the market? Avondale achieves strategic values far beyond financial predictions for our clients. We work closely with them ensuring that no stone is left unturned in achieving their ambitions.
Outstanding research, processes and careful positioning ensures for better quality auctions for higher quality assets. Combine this with years of experience and expertise in deal structures and project delivery and you have increased delivery of superior deals. This helps both buyers and sellers. Lateral thinking to find better strategic buyers adds value and imaginative deal structures such as elevator deals help maximise the partnership required for both sides to get better deals. Q. In your opinion, what are the key attributes to fit the “Gamechanger” title? Vision, agility, leadership, communication, grace and creativity. Specific to M&A, better deal structures, risk management, creativity and entrepreneurship in building both buyer and seller strategy to make better deals. Q. What motivates you as a business? Success for both our clients and Avondale; providing trusted advice is a key part of Avondale’s culture and also crucial to our success. Our advisers have genuine business acumen and work closely with clients to ensure they achieve, if not exceed their ambitions. The majority of our work comes from recommendation, further recognition of our ability to succeed, technical abilities, strong service ethos and principles led approach. Q. What does success mean to you? Being recognised for delivering and creating something positive, different, better and admirable; and having fun whilst achieving it. Q. What are the qualities a person must possess to be successful in business? What is your best advice to aspiring entrepreneurs and businesses out there? Vision and flair with clarity and focus, whilst always managing the risks. Taking the time to look further ahead and see things others have missed. Turning this to opportunity and driving at the opportunity with founded selfbelief. Knowing when to say yes and when to say no, and being responsive. Q. Where do you see yourself in 2020? Here. I like what I do, bigger better deals, with a strong team driving growth. Q. What does the future hold for Avondale? We achieved 25% growth last year, and, bar economic barriers, we aim to repeat this with a continually expanding team. Talent is critical and that’s our big conversation. We know we do and can get the best deals. Sharing that story will continue to position Avondale not just as experts but a brand to aspire to.
Flexibly DEsigned solutions providing corporate investment for 27 years.
Andreas Mondovits - Head of Marketing and Client Relations email@example.com +44 (0)20 3201 7700 www.icgam.com
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BARCLAYS ANNOUNCES ‘ANGEL HUBS’ THROUGH PARTNERSHIP WITH UK BUSINESS ANGELS ASSOCIATION, SUPPORTING ENTREPRENEURS. Barclays has announced an industry leading partnership with the UK Business Angels Association (UKBAA), to support its Birmingham Eagle Labs Incubator. The partnership will see the bank and UKBAA- the trade body for angel and early stage investing- pioneer new Angel Hubs, by including local angel investors in Barclays’ new network of entrepreneurial spaces. The intention is that through the collaboration, entrepreneurs will have access to a range of experts for mentorship and guidance around topics such as funding, as well as access to physical space in which to develop their business ideas and to grow. GameChangers talks exclusively to Richard Heggie, Head of High Growth and Entrepreneurs at Barclays.
Q. Assigning a dedicated team of 50 across the UK to support the start-up of HG&E in November, what developments have you seen since launching? There’s been positive reaction from our clients who are already in this space. We have also received wider recognition from the entrepreneurial community about this great resource to help support its growth and scale-up. So much so that we recently built on our work within the HG&E proposition by launching an innovative industry-leading partnership with the UK Angels network.
Q. What are the key financial needs of entrepreneurs? Obviously funding but like Jessie J said, it’s not about the money. Look at what else is on the table beyond the cash on offer and what value this will add to your business in terms of priceless assets like connections, expertise and insight/mentoring. Funding is important but making sure it is smart funding ensures that it will work for your company.
Q. What are the most common risks involved with start-up and expansion in businesses?
Q. How do Barclays manage the constant marketing differentiation in expansion an
Barclays has a history of being at the forefront of innova culture, we obsess about technology in the context of ho pertise to our customers and clients. One recent example which gives SMEs the insight of Big Data by bringing the UK banking first.
Q. How will we see HG&E develop over th
We are working on a host of improvements to our digita focused coverage teams, and new products and services afraid until we officially announce it but keep your eyes p
Q. There has been a vast stretch of chang nance overall over the past decade, what that impacted the launch of HG&E?
For me it is about recognizing that in an ever changing w added expertise, customer service and valuable connectio changes whether regulatory, technology, or alternative fi the key fundamentals of what people need and want rem than ever. These are at the core of our HG&E proposition
Q. Busting myths on “high-growth compa they rely on venture capital – can you sha mon myths within high-growth?
That you can’t grow a company thro That they are only tech companies That you need to be based in Silicon That companies need to expand nati high-growth success Q. What defines a Gamechanger?
Entrepreneurs face many challenges to creating a start-up. Key ones include funding and the financial risks associated with not having a strong line of funding in place. For some entrepreneurs considering how much of your own assets and money you can use to get the company off the ground, is the usual option taken, which obviously can carry a significant risk for you and loved ones. With a lack of knowledge or information it can be easy to make mistakes, particularly if this is your first time setting up on your own. So making poor decisions that could impact your company is another risk. In terms of scaling-up, Barclays landmark report into the limited growth of UK SMEs, Scale-up UK: Growing Business, Growing our Economy, identified that a company reliant upon the direction of one person can lead to missed opportunities and missed growth. This “bottle-neck of one mind” can mean a company risks not expanding in a way that is best for them.
I think it is anyone who sees an opportunity where other playing field accordingly. They may disrupt or they may in thing simple and needed that everyone wants but nobod is made.
Q. What were the main causes behind ‘growing UK firms’ missing out in comparison to U.S. counterparts?
Q. What is Barclay’s best advice for aspiri nesses in the banking and finance industr
I would say the main reason in the past could be the difference in the level of maturity of the business landscape in the UK vs US. Whether that is in terms of the business ecosystem and mind set or role models who have been there and done it so can help to mentor the next generation. Linked to this is the funding options to support those businesses that want to grow and the awareness of the value of entrepreneurs in terms of economic growth and societal impact. However, I certainly have seen a shift in attitudes towards SMEs and entrepreneurs over the past few years and there is now a real determined drive to help them in any way possible.
Collaborate, network, seek out advice, pick your partner forget to have fun. Oh, and come and see how Barclays
Q. For Barclays, what are the 5 key attribu er” title?
I think that that can change from situation to situation so ing this question.
Richard Heggie, Head of High Growth & Entrepreneurs a https://entrepreneurs.barclays/
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IT’S TIME TO UNLEASH THE POWER OF YOUTH CAPITAL By Bhanu Choudhrie The world’s population has never been younger and nowhere is this trend more pronounced than in emerging markets, home to more than 1.8 billion 15 to 24-yearolds. This is the demographic dividend; the prospect of unleashing youth capital to fuel spectacular growth. Emerging markets account for more than 50 per cent of the global economy. While growth has stagnated in many developed economies, the speed of change in the BRICs is unprecedented. China apart, they have youthful populations; their energy and potential is apparently limitless. “Never again is there likely to be such potential for economic and social progress,” according to the United Nations Population Fund. Yet, in too many of these societies, there is a generational divide. Political leaders, far from exploiting the “youth bulge”, seem frightened by it. They see problems, rather than opportunities. In India, which has a youth population of 356 million, it is ‘surplus’ young men; in China, university-educated manual labourers; in Russia, young alcoholics. Too many young people are trapped in cycles of inequality; social and economic mobility remains elusive; education is sub-standard; youth unemployment and underemployment is alarmingly high and rising; alienation is breeding violence and despair. Economic progress cannot be sustained if robust health, education and welfare systems are not put in place. The prosperity of a society does not exist in a vacuum; it must be underpinned by social, legal and environmental policies that promote it. Every aspect is intimately linked. Over the past decade, plenty of conferences and summits have been held to consider the economic and financial implications of the remarkable growth of emerging markets, but generally from the perspective of investors. That focus is too narrow. We cannot ignore the wider issues because a society’s prosperity depends on social cohesion just as much as the promotion of entrepreneurialism. That’s why C&C Alpha Group, which does business all over the world, set up the Emerging Markets Symposium eight years ago in partnership with Green Templeton College at Oxford University. Experts from across the globe come together under the chairmanship of Shaukat Aziz, former Prime Minister of Pakistan, to focus specifically on the social and welfare issues with which these countries are grappling. In previous years, the symposium has published reports on subjects such as child health, urbanization and security, but this year our focus is on young people in emerging markets - perhaps the most important subject of them all. Appropriately, of the 45 experts from 20 emerging markets and high-income countries, who were joined by 14 graduate students, one in three were under
30. The aim is to provide realistic answers to complex issues, identifying unexploited opportunities, and to do that credibly, we need to ensure the voice of this generation is heard. Jo Boyden, Professor of International Development at Oxford University, told the symposium that an estimated 200 million young people are failing to achieve their development potential. Young people comprise around 50 per cent of the world’s poor, yet most live in middleincome countries, not the world’s poorest societies. Professor Boyden heads an innovative research programme, Young Lives, which has been studying the progress of 12,000 children in India, Ethiopia, Peru and Vietnam over the last 15 years. Her team of researchers report dramatic improvements in infrastructure projects during this period, but the divide between rural and urban societies remains the key determinant of educational attainment and life outcomes. The scale of the social and geo-political challenges faced by emerging economies is immense. The challenge of sustaining economic growth goes hand in hand with tackling human welfare issues. Young people are disproportionately affected by societal challenges. Youth unemployment is often double the national average in emerging economies - yet these young people who cannot find jobs are often more highly skilled than the generation who are in work. This is happening at a time when traditional social institutions are losing their authority: a perfect storm. The purpose of the Emerging Markets Symposium, which we have committed to fund for at least another three years, is to persuade policy-makers there are practical, affordable answers to these difficult questions. Failing to answer them is not an option. We had three days of intensive and informed debate. Our full report will be published later this year, but three key priorities have been identified: - Overhauling education strategies to promote citizenship, critical thinking, entrepreneurism and social skills alongside academic and vocational skills - Re-designing health systems to make them more youth sensitive, including a more focused approach to mental health problems; Greater participation of young people in civic and political life by lowering the voting age to 16, and setting up domestic ‘Peace Corps’ to promote social inclusion - Excluding young people from political systems and failing to prioritise investment in their health, education, well-being and productive capacity undermines the sustainability of these emerging economies. No one under-estimates the difficulty of achieving change; but the starting point surely needs to be a more positive dialogue between the generations. Bhanu Choudhrie is founder of C&C Alpha Group, an international private equity business headquartered in London.
GOOD ECONOMICS SHOULDN’T COST THE EARTH However, it seems to us that in considering these factors, investors, like executives, are looking at it as an additional risk mitigation overlay to normal or standard economic and financial metrics. That to us is a profound problem in that it seems to separate out what are accepted ‘normal’ economic-based decisions and ESG considerations.
Saker Nusseibeh CEO of Hermes Investment Management
We are finally starting to realize on an official level that our economies, our industrial activities, and our financial decisions have a very direct and tangible impact on Earth, and the sustainable development of human civilization. The Paris climate change agreement and the UN global sustainability goals are a testimony to this fact. All this is good and great. However, we have a much deeper challenge to face, and a more radical shift is required in our mindset in order to truly usher in the wave of change needed. Money and finances are key to almost every type of new initiative. From software design to the latest app, from industrial manufacturing to the latest gadget, from agriculture to the latest genetically modified tomato, finance and capital allocation determine what gets done, and what stays in the realm of ideas. Indeed, in order for an idea to be funded, its value has to be established for those who are considering investing or raising the funds. The problem is that we seem to have a dichotomy between what we perceive to be solid economic and financial rules and our unease about the effect of our economic activity on the ecosystem we live in. It is interesting that many investment houses are now moving to say that they now consider ESG factors in their decisions, as are companies. They are doing so because COP21, hopefully, has finally underlined the point that the impact of our investment and commercial
Under this scenario, for example, BP’s decisions were logical financially, except that the management failed to mitigate the possible financial risk of an ecological disaster. Surely, this artificial separation between ‘normal’ economics and ESG considerations is neither workable in the long term, nor logical, for ESG matters, then surely it has to be part of the economic and financial framework. Traditional economics and finance has taught generations of company executives, investors and regulators to value money through the lens of two major parameters, risk and time. Open any finance textbook, advanced, intermediary, or beginners, and have a look at the two pillars of Value that these books teach. Across the planet, in almost all languages, when you are taught mainstream principles of finance, of value, you are taught Time Value of Money, and Risk and Return. This then forms the basis of all discounting models and asset pricing models used in finance today. Adjusted, tweaked or not, these models derive their conclusions of value from the Risk Return and Time Return of investments, combining them into a rule(s) of decision making that treats the environmental and societal impact of the investment as exogenous. At best, the models deal with positive or negative externalities qualitatively, as an addendum to the core mathematically represented axiomatic relationships of monetary value. We would therefore like to suggest that the current financial models are simply incapable of incorporating the environmental impact we seem to have agreed upon in Paris or the societal impact that was referenced in Davos. The current risk/time discount model is akin to a financial cyclops. Our contention is that a more robust financial model that can incorporate these ‘externalities’ financially in the calculation of risk and return is needed. One that takes into account the impact of investment decisions on the environment and on society, (both positive and negative, so the impact on society might be positive if it creates employment for example). Professor Papazian is therefore proposing in his forthcoming book an amendment to the traditional time discount model to incorporate these outcomes financially. He calls this Spacetime, as opposed to our current Risktime limited model. Such an amendment that incorporates the physical effects of investment decisions both on a company and investor level within the context of financial theory is sorely needed. Unless
Armen Papazian, CEO of Finoptek
we are able to modernise our financial value models in this new ‘Spacetime”context, from the ground up, our ecological and environmental responsibility, which we say we are committed to, will have to be taken on outside the mainstream financial current. Moreover, we will always feel we have to justify this concern outside of the accepted parameters of finance. We use the term ‘modernise’ here advisedly, for we note that while the ideas that form the basis of science are constantly changing and developing, those basic tenets that underline modern economic understanding have remained stagnant for well over a century. The challenge for economists and investors therefore is, to evolve the theory and practice of finance, allowing its contextual modelling to shift, to embrace the impact of decisions of the ‘real’ world as opposed to remaining within the context of a ‘theoretical’ financial world and incorporate this impact in our financial value models, which we believe Professor Papazian’s formula does. Indeed, from climate change, to waste, to debt, to increasing societal wealth disparity which is likely to lead to political instability, a creative adjustment is usually all that it takes to shift the mind from the position of needing a solution, to having a solution, and then living it. Consciously or not, individually, and as a species, we use creative adjustment all the time – we learn and evolve by making necessary changes to our own frame of mind. The creative adjustment needed in finance and economics is crucial, and much depends on our ability to rethink our financial architecture and principles of value. We believe the-principle of the Space value of money, as proposed by Armen Papazian, introduces the missing context into finance, i.e., impact on the environment, the real economy, etc , and allows a shift in our contextual definitions. Value creation in Spacetime is risky business, and as such, the assessment of risk remains relevant. Furthermore, space value and time value together allow for a better perspective and understanding of investments and their worth. As such, they are complementary. When we choose to integrate spatial responsibility into the return and value calculations of an investor, we are in fact integrating space value and time value, entrenching our impact and our return into one holistic equation, where one cannot truly be achieved without the other. We should be happy about the deal in Paris, we should also be delighted with the new global sustainability goals, but without a further push to transform the very core of financial value theory, and the subsequent education of our children, we are still flirting with change instead of implementing it.
INTANGIBLE ASSETS ARE FOR EVERYONE BY JACKIE MAGUIRE, FOUNDER AND DIRECTOR, COLLER IP The terms intellectual property and intangible assets may often seem somewhat nebulous to those not engaged in dealing with these concepts from day to day. Yet at least a rudimentary understanding of what they are and how to protect them is just as crucial to employees as knowing how to prevent their physical (or tangible) assets from being stolen. Unfortunately, understanding intellectual property (IP) is all too often left to a particular responsible department, if there is one, or it is becomes just part of the job remit of one particular individual. While many people know that patents, trademarks, designs and copyright all form part of an organisation’s IP, it is often a surprise, particularly to more junior staff, that a company’s value is also contained in its wider intangible assets (IA), including know-how, branding, reputation, skills, policies and business processes. It is important that these assets are understood by a critical mass of employees. It may only take one unguarded conversation or an unexpected external visitor to a desk where vital documents are on display to reveal some important aspect of company technology or business, for a valuable asset to be lost forever. Thus, along with the development of the intangible assets to reflect, complement and inform the business plan, there needs to be a parallel focus on retention and protection of IA. This includes training staff on company policy on issues such as confidentiality, visitors and third party meetings. Even today, it is still not generally recognised by company directors, including start-ups, that some 80% of the value of a business can reside in its intangible assets. It is important for senior-level people in a company to recognise exactly what these assets are, which ones are most valuable to the business going forward, what new ideas for products and services might fit with the existing portfolio as well as aspects which may not be so relevant, in order to plan the future strategic development of the business. But the need to have a working knowledge of what constitutes intellectual property, its value to a company and how to protect it, needs to go both vertically and horizontally across a company. An important management task, whatever the size of organisation, is to ensure that employees’ mindsets are such that all innovation is respected and valued. Many workers are given training, or learn themselves, at least the basics of IT security to stop their personal or work documents from being corrupted or stolen, but equivalent understanding is often not provided when it comes to valuing and protecting a company’s ideas, inventions and other intangible assets. Valuing What you Have Without an appreciation of the value of intellectual property, the message about protecting it is often forgotten by employees. One of the most important steps is for a company to fully value its intangible assets. A safe practice is to assume that all key listed assets have a value, since the risks associated with under valuing them are much higher. Often, employees are so familiar with their company’s activities, products, business processes and inventions in the pipeline that they tend to take them for granted, meaning that important intangible assets are overlooked and undervalued.
A first step to fully appreciate the intangible assets in an organisation is to undertake a detailed audit. In this exercise, the full range of intangible assets can be captured, listed and recorded, giving a complete picture. Any IP specialist undertaking such an audit will also give advice to management on protecting these ‘crown jewels’ of the business, through a variety of best practice methods, and will advise which are most suitable to commercialise for the particular organisation. Who Should be Trained? All staff, particularly those involved in R&D, need to be aware of the implications of disclosing their inventions. By disclosing their ideas in external discussions or by publishing even outlines of them in journals or conference papers, employees are potentially making their company’s technology available to the public at large, including competitors. From that point onwards, it will be difficult to secure protection for that idea and the long term revenue that may go with it. If no patent application has already been filed, the invention may no longer be considered to be novel or inventive, and it will become difficult to obtain a commercially valuable patent to protect it. It is recommended that prior to any external disclosure whatsoever, organisations should think hard and if necessary take advice on precisely when they should patent their inventions and how they should go about it. When it comes to discussions with potential partners and collaborators, this is vital. Otherwise, there is a serious risk of giving away ideas or inventions for free, meaning that the intangible assets will leak away with a resulting loss in competitive position and commercial advantage. Training programmes that communicate this are therefore a vital part of any IP strategy – and therefore business strategy. While we don’t advocate that every single employee needs to understand IP in depth, training in IP at appropriate levels should be provided right across an organisation, tailored on a ‘need to know’ basis. The best employee coaching or training programmes are carefully tailored to the individual business requirements and often carried out on site by intellectual property (IP) professionals who have themselves experienced the challenges of running a business, to individuals or small groups. It can initially seem a complex area to those unfamiliar with the concepts, so this approach allows for detailed questioning and explanation and putting it in the context of the particular business. In small companies with a technical focus, probably all employees need a good understanding of IA, while in larger companies training should be provided at first line manager and above, and in particular to customer-facing staff. All those that attend customer or supplier meetings, have contract negotiations, technical discussions or those engaged in visits to customers, suppliers or other potential partners for example, require a good grasp of which intangible assets are important to the business. Senior managers may also need some coaching not only to understand what their staff are learning but also about their role in ensuring that intangible assets are captured, protected and exploited. In larger organisations, as well as some smaller ones, it is impossible for managers to oversee all activities with third parties. It is therefore essential that the workforce can be relied on to understand the importance of self-policing and of intangible assets. This can be done through a programme of training on exactly what these
assets are combined with practical advice on how best to protect them, while at the same time on how to promote the success and innovation abilities of the company in the best light. This should be implemented right across the company – the most junior person discussing a matter that is confidential in a public space such as on public transport or even in a cab could potentially cause significant damage - many employees (young and old) are not always aware of what exactly is confidential and the potential consequences of disclosure. It is often found that staff involved in technical roles are at risk of “leaking” precious company assets. Often enthusiasts who like ‘talking tech’ to anyone who will listen, they may also be quite modest about their own knowledge and achievements, meaning that they undervalue the years of experience which enables something which is actually quite complex to appear relatively simple to them. The undervaluing of intangible assets and/or pride in achievements are the main reasons why leakage – of ideas and processes for example - occurs. Sales and marketing staff may find this frustrating, as they will want to demonstrate the capabilities of an organisation while at the same time being told they must be careful not to give ideas away for nothing. Good training programmes will explain all the essential elements of what makes up the concept of intangible assets, including so-called ‘soft skills’, such as the people element, including ‘know-how, ’ which can be just as much an asset as ideas or designs. Depending on the needs of the organisation, this could include, for example, best practice on how a partnership agreement could be written to ensure that the intangible assets are protected. This can be especially important for suppliers where trading may be unbalanced if the customer base is controlled by organisations that have a more advanced awareness of IP matters. Issues can arise when companies in emerging markets begin trading, as they are doing increasingly, with Western countries who have different standards and expectations regarding intangible assets. There are many aspects involved with the growing internationalisation of IA, including, for example, confidentiality clauses - whether non-disclosure agreements (NDAs) are enough, for example. It can sometimes be difficult to balance the need for security with the need for openness when collaborating. A proposed partnership between an established company that understands its intangible assets and how to protect them and one that is new to the game can lead to a significant unintended flow of assets from the new company to the more established one. Company policy with respect to confidentiality, access to buildings, meetings with third parties and innovation disclosure all need to be publicised and practised, ensuring that all employees recognise that the risk of giving away intangible assets increases with any third-party interaction – whether formal or informal. How Should Training Be Undertaken? Publicly available courses and online tools can go some way to achieving this. But training really needs to be focused on achieving the right culture in which appreciating the innovative and valuable assets across the organisation is paramount. An outside IP specialist who will take an independent look at a business and focus their advice and training programme around that business can bring about this cultural change. An IP culture is achieved primarily through education and training, with senior management acting as good role models. One way that we have seen senior management successfully raise the profile of intangible assets is to work with them on preparing
divisional business plans that reference intangible asset plans for each division, which in turn support commercial objectives and the company business plan. These plans should have clear ownership by a named individual and milestones which are visible to the people within the organisation. For example, one element of the plan might be to create and maintain a register of the key intangible assets within the division. A small team can act as the owners, the members of which will then work to publicise the importance of intangible assets within the organisation. A further example relates to access control, protecting key assets inside controlled boundaries. It is critical to have an IP training strategy that engages the whole workforce in this, and involving as many key people as possible in the implementation will create the self-policing environment required both to capture and retain intangible assets. Staff who are customer-facing need to be trained to ensure that meetings with clients are well managed with a clear agenda, with limited selected attendance – on a ‘need-to-know’ basis, and that even informal gatherings should be well-controlled. The importance of good record keeping and provision of formal meeting notes should be emphasised to ensure that there is clarity about what was discussed and what actions were agreed. As part of this, any sharing of information should record who provided the information, and its content. This applies even to meetings of a brain-storming type or where a joint approach to innovation has been agreed. Conclusion All businesses need to ensure they have strategies in place to prevent leakage of information and the subsequent flow of value from their intangible assets. Organisations are empowered by knowledge, and understanding the value of the intangible assets residing in that business is a key part of that, whether or not a company has specialist IP advisors. At some level, the entire workforce needs to understand the importance of the assets, from the directors to the most junior worker who may be in receipt of company confidential information. Marrying the strategic direction of a company to its intangible assets and vice versa has never been more important and will be increasingly so with greater globalisation. Ensuring that the workforce understands the crucial importance of protecting intangible assets is a vital part of growing a successful business. Note to Editors Jackie Maguire is a founder and director at Coller IP, a UK based provider of commercial intellectual property (IP) management and evaluation services. The company specialises in helping organisations value, protect and commercialise intellectual property, including advising SMEs on how to protect their intangible assets and minimise the risk of losing them. It offers IP analysis and commercialisation, patent and trademark attorney services, and IP opinion and valuation services. It also provides IP brokerage and training. Jackie Maguire has extensive experience in the technical, legal and commercial aspects of IP. In 2009 she was listed by Intellectual Asset Management magazine as one of the top 300 IP strategists worldwide and in the top ten in the UK and each year since she has been voted once again into the top 300. Her founding partner, Jim Asher leads Coller IP’s valuation practice which was voted UK IP Valuation Firm of the Year in 2013 and every year since. Website: www.collerip.com
GAMECHANGERS TALKS TO MIKE PORRA, NITRO CIRCUS CEO AND CREATIVE DIRECTOR AHEAD OF NITRO CIRCUS TOUR, THE WORLD’S BIGGEST LIVE ACTION SPORTS SHOW Nitro Circus is the world’s leading youth action, sports and entertainment brand. And CEO Mike Porra is aiming to make it even bigger and even better in coming years with bigger events, more daring stunts and global championships for the world’s best daredevils. We caught up with Mike to get the lowdown on Nitro Circus; its origins, the highs and lows, the thrills and spills and Mike’s plans for the future. Mike, take us back to the start. How did this crazy journey begin and how did Nitro Circus become a worldwide brand? Well, it was all down to Travis Pastrana. He kind of created this thing and he’s a remarkable guy. I guess it happened at his house. He invites all his friends round and things get a little crazy. One time when we were there, someone came up with the idea of a circus movie. About a year or so after that, one of the guys from Jackass put forward the idea of producing an MTV thing and it became a number one hit. That was what made Nitro Circus famous. So how did you get involved? I came in and offered to buy it. I wanted to create the live show. I wanted to do something to turn Nitro Circus into a theatrical spectacular. Travis and I hit it off immediately when we first met. I’ve been doing this sort of thing for so many years and have a lot of experience. When Travis and I talked, he realised that I could do it. He knew I could make Nitro Circus a global phenomenon. We did the deal pretty much straight away and we’ve been touring every continent in the world ever since. The action has been the same across borders and across languages. What are the different audiences like around the world? Well, young people love what we do. We get people right around the globe who love to see stuff like this. They yell and they scream, wherever we are. In Japan, we thought they might be more reserved but they just go crazy. They rip the roof off. It’s the same in China. We thought they would be quiet but they definitely weren’t. It’s been pretty much the same reaction everywhere we’ve gone. It’s been amazingly successful. Nitro Circus is a colossal show and it costs you around $1 million USD to put on a show. You roll into towns and cities with 16 trucks of gear, 125 staff and an insurance bill that is terrifying. It seems as though you’re taking the same sort of financial risks as your riders are taking when they do their jumps.? Well, you’re right about that. We’ve put about $60 million USD in to this over the past couple of years. It’s still a relatively niche touring company. But we want to turn it into a full blown media and entertainment company. That’s what we are. We’ve shot a 3D movie, which has done very well. We’ve launched the Nitro World Games, which will be the biggest event in the history of action sports. We’ll be streaming those live on prime time TV in the Sates, on NBC and NBC Sports Live Extra. We have so many plans. What we are doing is going to be phenomenal.
How important is it for you to embrace social media now that we live in a digital age. How much easier is it for you to get your content out there and satisfy the audience? We’re producing multiple content streams right now just to keep up. We have up to three or four different clips per day from whatever we’re doing the show. The quality of our content drives our profile. People around the world can click and watch every day. The idea is to create incredible events and to be in touch on a daily basis with our fans around the world. The things that we screen are unique. You know, we had a guy do a triple back flip through the air, it was literally a do-or-die stunt. It had more than 20 million views online. That’s the size of the audience that we’re tapping into. So we’re continually pumping out these crazy, outrageous specials. Nitro Circus taps into our childlike love of daredevils. How difficult is it for you to continually come up with something new? It must be tough to keep on pushing until you find the edge? Well, we’re always looking at what comes next. We have an enormous stunt in the pipeline over the next 12-18 months, for instance, which we’ll talk about in more detail soon. Then there’s the Nitro World Games. They’re going to revolutionise action sports. They’ll happen in July 2016 and will be the biggest event we’ve ever been involved in. They’re happening at Salt Lake City. We looked around the world for venues and talked to guys in Europe and China and Australia, as well as the States. In the end, Salt Lake City came back with the best bit. It made a very, very large cash contribution as well as providing a free venue. It’ll be the home of action sports worldwide. But we know that we have to keep pushing. We have to come in and completely blow everything out of the water. Mike, Nitro Circus seems to tap into something primal in all of us. Watching riders risk their lives doing these incredible stunts is one of the most thrilling things in the world.? You’re right. And I think it all goes back to the Gladiator days. There’s nothing any different between what we’re doing now and what they were doing then. These days there are people 30ft away from the action and there’s some guy who’s 50ft up in the air on a motorbike and if he makes one mistake he’ll land on cold metal and he’ll probably die. People know they are 30ft away from danger and that creates incredible excitement. The crew of riders must be pretty special. Where do you find them? Well, all the guys who are on our team are true daredevils. They’re like the kids who were at school who would be at the top of the tree jumping off for kicks. At Nitro Circus, everyone is like that. They have no fear. There’s nothing unusual about them. They’re not stupid, they’re not bad boys or rebels. They are absolutely normal. They are lovely, sweet kids who want to do something spectacular. They are polite and sign the autographs after shows. They’re cool. But the difference between them and the man in the street is that they literally have no fear. Sometimes I’ll talk to the guys and say: ‘I have this idea, it’s gonna sound crazy, but I want to talk about it’. Then they’ll look at me and say: ‘Yeah, I’ll try that, it’s not so crazy’. Everything is planned and everyone is trained. Sure, but then if you’re constantly coming up with edgier and edgier stunts, there must be an even
ARISE greater element of danger? Well, not quite. You see, we take as much as the risk as we possibly can out of it. There’s always some risk, that goes without saying. But I won’t let anybody do a jump until they’ve done it 50 times in a row without making a mistake during a practice. The chance, then, is that they will make it when they do it in front of a crowd. But in every show we have several crashes, without a doubt. We are always going to have a crash. The atmosphere at the Nitro Circus events is electrifying. It’s more than sport. It’s entertainment. And the guys know how to put on a show for the crowds.? That’s right. They do because they are all showmen. They are professional athletes and supremely talented. All of them could make it in some other sport. But they like the freedom to be able to express themselves and do what they want to do. They do this sport, which is freestyling, because they can take huge risks and push themselves to the limit. They need and must have that adrenalin. For the riders, it’s all about exhilaration. If they don’t get that, they become bored and unhappy. The guys are a great mix and they’re from all over. We’ve got riders from Japan, the UK, America, New Zealand, Australia, Eastern Europe and beyond. We get great riders from all over the world. You mentioned taking the risk out of the show and making things safe for your guys. Explain a little more, please, about how you do that.? I’ve been doing this for 12 years and we are way, way ahead of all the best practice on this. We are required to have one team of paramedics but we have two teams plus two ambulances and a fulltime trauma doctor. Then there’s an overall lead doctor who is based in Los Angeles and checks the records of all the athletes. The guys all go to him and he tracks all their injuries. We have all the protocols in place. We are doing better than a lot of the football leagues. We’re not required to do a lot of these things, there’s no governing body, but we go above and beyond. Look, what we do is dangerous and the riders we have are great kids and we want to look after them. We can afford to put the best possible care in place. If I have a kid go down I want to know that he’s got paramedics and an expert, trauma specialist with him within three seconds of him hitting the ground. I want to know that he’ll be at a local hospital within minutes. I couldn’t live with myself without that. These kids are such great kids. You know, we stick by each other. We’re family. If your mate goes down, you don’t leave him down. There must be incredible mateship on the road. You’re like a band of brothers, heading from city to city, or town to town. It must be like being in a band, or being in the trenches together? It is. These kids are my friends and my family and my mates. I would give it away before letting things slip. We take precautions. We know that from time to time we’re going to get broken legs and wrists but in all my years we’ve only had one really bad injury.
backflip his bike. I went and saw him and he did it 20 times perfectly. Then we went on the US tour but I couldn’t let him do it. When the time came, I said no. It broke my heart. I couldn’t have lived with myself if anything else had gone wrong. I couldn’t put him on. What happened? Bruce came to me and said if I didn’t let him do it he would have nothing to live for. He said: ‘If you don’t let me do it I’m just a guy in the wheelchair sitting around my house and I may as well kill myself’. So I gave in. And he did it and it was the most incredible thing. Three months on, he’s got a huge following. He does his jump at halftime and has all the kids jumping out of the stands. Bruce has become a phenomena. He gets more requests for interviews than Travis. Wow, that’s a really inspirational story. It’s incredible that he came back from the brink. It shows the strength of the human spirit. It does. It’s so tear jerking and inspirational. People see him strap himself into his bike. They know that if he crashes he goes down with the bike. And because he can’t move the bottom half of his body, it’s incredibly dangerous. There’s only a handful of guys who can back flip, let alone do it without the use of their legs. Bruce has to generate all of the movement using controls with his fingers, rather than his bodyweight. It’s extraordinary. But he does it. Everyone cheers. I cried for five minutes the first night he did it. I was so scared. I had my head down and was looking through my fingers and I couldn’t even watch. I’m a grown man but the pressure on me was unbearable. You know, I had made that guy a paraplegic. And I knew that if he rolled the bike he’d be gone, he’d be a quadriplegic. But he did it. He landed cleanly. I had my head in my hands and uncontrollably sobbed for five minutes. You have such a cool job. You’re travelling the world. You’re giving the riders the chance to live their dreams. You’re entertaining the crowds. I imagine it gets pretty stressful, but it must be great fun too? For me personally, I consider myself to have the best job in the world. You know, I get to see this thing every Saturday night and the shows are usually sold out for four months in advance. The people around the world really appreciate it. So, you know, I love it. I get excited about it. I’m six years into this job with Nitro and I’m just as excited about the show tomorrow as any of the other shows I’ve ever done. It’s amazing to have a job that’s so exciting and so much fun. But if the riders are the ones getting all of their kicks from the adrenalin of jumping, how do you get your buzz? Well, I’m an adrenalin junkie myself. I’m from a big surfing background. My risks are financial, in some ways. But I need to take those risks to feel happy and my family knows that. They let me do it because they know I won’t be happy unless I do it. It must be a great feeling at the end of a show?
Do you mind telling us what happened? We’ve got a guy called Bruce Cook. He became the world’s first paraplegic to backflip a motorcycle. He went down in Hamilton, near Toronto, in 2014 when he was doing a double frontflip on a motorcycle. He didn’t quite get the bike around and had a hard crash that broke a veterbrae and damaged his spinal cord. It was sad, really sad. But the shining light is that he came to me a couple of months ago because he’d managed to get on his bike. You know, this is a guy who’s in a wheelchair but he can ride his bike now because it’s been specially adapted. He asked me if he could go on the road and
It is. The after party with all my riders is awesome. The crew and the riders all work hard and we all smash into the drinks and the shots after a show. We’re all up there dancing and the feeling is like we’ve won the Premier League. To have that kind of intense celebration where the euphoria is amazing is a real gift. To have that at my age and have that camaraderie and friendship with the riders is a blessing. It’s fun and I love it. I wouldn’t swop it for anything else on earth.
WHY UNITRANCHE FINANCING IS REVOLUTIONISING CORPORATE LENDING
not quite there yet in the UK or Europe, but non-bank lenders account for nearly half of mid-market lending in the UK. There will still be a role to play for banks in providing working capital facilities, hedging, ancillary banking lines etc, however we are witnessing a fundamental realignment in the market with improved options for corporates looking to raise debt finance.
BY BEN DAVIS, A PARTNER AT REED SMITH LLP, WHERE HE LEADS THE LEVERAGED FINANCE PRACTICE.
What further developments will we see in the corporate lending market in the coming year?
The corporate lending market has experienced substantial structural change in recent years. Traditional banks have retreated from the market, new challenger banks have emerged and alternative lenders have revolutionised the market by providing unitranche financing. But who are these alternative lenders, why is unitranche finance becoming so popular and what further developments can we expect to see in this part of the market? Unitranche finance has come to be defined by the types of alternative lenders providing these facilities and their alternative philosophy to corporate lending. These institutions are non-bank institutional lenders such as ICG or new private debt funds such as BlueBay or Crescent. They seek to deploy capital on a long term basis and free of the regulations imposed by banks, and they are fast becoming the new relationship lenders in the European corporate lending market. Why are private equity sponsors and corporates turning to these alternative lenders and their unitranche product for their debt financing requirements? Firstly, the answer is deliverability. They offer simplified credit approval processes, compressed timelines, larger hold levels and a fresh approach to assessing credit risk. This can simplify a process significantly and allow strategic objectives to be met. Secondly, they can structure transactions more flexibly – whether that be higher leverage, a reduced requirement for shareholder funding, greater covenant headroom or providing funding for further growth and bolt-on acquisitions. These flexibilities can drive growth in equity value and their advantages are becoming more widely recognised, notwithstanding the more expensive pricing associated with this type of financing. Some commentators have queried whether alternative lenders will displace banks from the market completely. In the US, where the unitranche market originated, the share of the market taken by institutional (non-bank) lenders is c.80%. We’re
The first very discernible trend is the launch of larger private debt funds, such as BlueBay’s 2.1 billion direct lending fund and ICG’s 3 billion senior lending fund last year. These jumbo funds give certain unitranche providers increased armoury to underwrite larger transactions and some can provide underwrites in excess of £200-300 million (which is a substantial increase on their original underwrites of c.£30-60m). This allows them to compete in a market otherwise dominated by traditional bankled high yield and syndicated loan financings. ICG’s £155 million underwrite for Caledonia’s acquisition of Gala Bingo and Ares’ 250 million underwrite for Eurazeo’s acquisition of Fintrax are good examples of these larger deals. At the opposite end of the size spectrum, we are also seeing other private debt funds focus more on the smaller transactions and financing businesses with EBITDA of c. 5m upwards. Secondly, the continued innovation and flexibility of private debt funds is driving the development of ‘blended’ unitranche transactions, where the unitranche facility sits alongside a cheaper term loan or ABL facility provided by a bank and thereby reducing the overall cost of capital for the borrower. These transactions can take the form of ‘first out/ second out’ structures and what we are seeing is that each transaction is customised for the most appropriate capital structure. The continued evolution of the market is also taking private debt funds further afield geographically. While unitranche is the dominant mid-market financing product in the UK and France, and continuing to take hold in Germany, we are seeing the unitranche product being accepted in new European markets, such as the Spanish, Benelux and Scandinavian regions. There are exciting developments in the corporate finance market and the established presence of unitranche lenders is providing much needed liquidity and driving innovation in the lending market. Expect to see further developments as these alternative lenders adapt to suit the ever changing requirements of borrowers.
BUSINESSES NEED TO ADDRESS THE HIDDEN COST IN THEIR WORKFORCE A stress specialist who has helped hundreds of people manage anxiety and dozens of businesses improve efficiency using a little-known treatment, is turning her attention to perhaps the most stressed workforce of all – city workers. Paula Ruane, who runs Ruane BioEnergetics, is urging city businesses to combat habitual poor time-keeping, an underreported issue that she says is draining the UK’s productivity. Paula explains: “There’s been a big focus on absenteeism, which is said to cost the UK economy £16billion a year. We’ve even heard about the £9billion lost annually to staff lateness. However, this is just the tip of the iceberg. There’s a hidden figure that none of us know about, the cost of employees starting late, leaving early and generally being less productive at work, much of which can be attributed to stress. “Put simply, a happy workforce is a productive workforce, but employers need to be more proactive in addressing any issues within their teams, before they reach tipping point and the consequences affect a business’ bottom line.” To help overcome the issue, Paula practices the ground-breaking HeartMath training which enables people to control their heart rhythms and manage day-to-day stress using tools and techniques which are ground in decades of scientific research. Paula is one of only 75 licenced group practitioners of HeartMath the UK. Working closely with company HR departments to understand any issues within the workforce, Paula then engages employees in a unique three-step system which looks at symptoms and patterns of stress, techniques for treatment and management of emotions.” So far, Paula has worked with a range of businesses and individuals from sectors such as law, accounting, and healthcare. Clients have reported better sleep, reduced anxiety and greater clarity, all of which has improved their work. Paula concludes: “Many businesses may think of stress management as a bit of fluff, an unnecessary expense or simply not their priority. This is particularly the case in the business world, where employees are conditioned to think that admitting to stress is a sign of weakness. However, stress is very common in the work environment, it does affect most businesses and certainly does hurt their profit. They just don’t see it.”
GAMECHANGERS TALKS TO AWARD WINNING CHRISTOPHER RIDDELL, GROUP PENSION AND INDIVIDUAL INSURANCE ADVISOR OF WISE RIDDELL FINANCIAL GROUP Q. Will you tell us more about Wise Riddell Financial Group. Wise Riddell Financial Group has been a leader in providing personal financial planning services and is dedicated to building lasting client relationships. Our primary objective is to help our clients plan for financial security by providing quality planning advice and products through our highly qualified team of specialists augmented by a network of consultants. Our expertise comes from working with Physicians, Executives, Business Owners and also members of group retirement plans. We are client focused. Our role is to help our clients prepare for the expected and unexpected transitions in life. Our process ensures all aspects of a client’s circumstances are reviewed and integrated into an individualized plan to meet their retirement objectives and achieve financial independence. The founders of the firm have provided me with a strong base to work from and with some experience and momentum in some key areas we want to capitalize upon. My role is to focus on the areas with the greatest potential, and maximize the potential for the company in those areas. Q. Can you tell us more about the pension/group retirement savings industry and financial planning? The 2011 Survey provided by Canada’s Pension Landscape Report placed the value of the top 1,000 pensions in Canada at $1.12 trillion. The plan carriers (the institutions providing custodial services) are quite concentrated and very sophisticated, but the delivery of the plan at the member level has not truly evolved in 50 years. Yes, computer interfaces have been developed between the member and their money, but the take-up rate by members of this digital interface is less than 6%. Unfortunately, the normal approach by group savings advisors is to provide companies and their employees with educational sessions once or twice a year. These sessions are voluntary to members, repetitive, sanitized by in-house legal departments and generic in their approach. As a result, attendance is abysmal. And, the results of this process are not encouraging. Industry research shows that one in three workers is struggling with their finances. This leads to stress which impacts on productivity. The same industry research showed that people who work with an advisor are improving their situation significantly and have, on average, three times the industry average in investment assets largely as a result of having a financial road map and the encouragement to stick to their plan. So the question remains “should plan sponsors offer access to professional advisors to help?” To date, there’s been a low level of uptake on this model partially out of fear, but mostly out of ignorance that this approach exists and the benefits it can offer. Q. What developments have there been since your father Kevin Riddell launched the firm 35 years ago? Internally, since Kevin founded the firm, there has been significant growth in skill sets, broadening of perspective and enhancement of services. From a singular focus on risk management, the firm has grown into a wealth management practise taking a very holistic approach to planning and adding skills and competencies in a broad spectrum of disciplines. Kevin was able to attract leaders in their field who brought knowledge and expertise to an industry that was plagued by “Jack of all trades” purveyors of services. The firm developed a “team” approach to client service that continues to this day. Externally, the group retirement savings universe has grown, but has not truly evolved. In 2004, the industry tried to get out ahead of the curve by developing its own set of Capital Accumulation Plan Guidelines (CAP), but the guidelines were unenforceable, not well endorsed and required a change in mind-set. Adaption of the CAP guidelines would raise the bar in terms of a members’ rights and expectations from pension plan sponsors (their employer), but without teeth, the guidelines have not created much in the way of change. Members of even the most generous pension plans, like many individual investors, lack the experience, knowledge, inclination or patience to manage an investment portfolio; in fact, many want advice and assistance with their plans. Appropriate advice can help a plan member structure and manage a portfolio so as to maximize the benefit of their retirement savings plan. The CAP Guidelines place specific responsibility on companies to provide member education and support, and as the world becomes more litigious, this may become more prevalent, but presently, it receives inadequate focus. Advice can also help to protect a plan sponsor against potential liability by reducing the risk of poor performance due to bad investment selection and management. If the plan sponsor does their due diligence in choosing an advisor, to provide voluntary advice to their members, they are actually shifting that risk to the professional who are trained, licensed and insured to provide such advice. Human Resource Professionals are not trained to provide insight into investment directions, nor are they qualified to suggest how much employees should be saving. There is a perception that litigation will ensue if advice is provided, but this fear may be exaggerated as that approach is a threat to the conventional pension delivery model. If the advice is provided by a registered professional who satisfies industry and regulatory standards, the chance of successful litigation resulting from the questioning of the advice provided is limited.
ARISE Q. In your opinion what is involved in quality planning from an advisory perspective? The better the discovery process the better the outcome. As our tagline says, clarity precedes success. The planning process, to be successful has to have equal parts empathy and mathematics, and a planner needs textbook knowledge combined with an acute understanding of human emotion as we need to get clients to do the things they would not always willingly do on their own. I feel that creating a relationship and understanding the individual is crucial for effective planning. Of course having a well built and diversified portfolio with well managed investments and continuous growth is what everyone wants, but there are no two situations that are alike and, therefore, there is no single solution. This is why group sessions for retirement planning are ineffective and engagement levels continue to be lack lustre. By getting to know every client and their personal situation, it allows us, as advisors, to build a plan that is suited for them and most importantly a plan they can stick with. Q. What are the most detrimental risks involved? As human beings, we are wired to do the things that are detrimental to our financial success. We all know to make money, you have to buy low and sell high, but emotionally, we buy based on good news (when the price is high) and sell on bad news. An emotional recipe for losing money, and the greatest risk for the results of the plan not meeting expectations. This is particularly true in a low interest rate environment where guaranteed solutions do not yield returns that would allow anyone to retire. For us, being in the industry of advising clients on where to invest their money, there is always the risk that a loss due to one of our recommendations will result in some form of legal or disciplinary action. Even though this is a present day risk, we do our due diligence to make sure that every meeting is thoroughly documented. More importantly, we spend a lot of energy and time managing this risk before any case would present itself. We do this by employing a team to continually monitor the people behind the recommendations we make. Q. What are the essentials in planning financial security as an individual? As noted above, a good discovery process that gets the facts on the table, along with an empathetic state of mind, good math, and a process to continually review, monitor and report to the client should result in a successful outcome. Secondly, being independent allows us to canvass the product landscape to find the best solution for each of our client’s needs, lower cost and enhance performance. While there are a lot of different career professionals out there that provide a great service to their clients, our independence allows us provide much more. There is significant concentration across the Canadian investment landscape. Over 80% of individual wealth is controlled by the country’s five major banks and 3 largest insurance companies. Our independence puts us in the position to offer any strategy and any product to achieve the client’s objectives without being incentivised to use our sponsor’s products. Q. What unique ideas and solutions does your work have on your business? In the group savings arena, and with our model, a “rifle” approach is essential. The numbers are large, and the consequences can be significant; so avoiding mistakes is essential. The market’s exposure to the Wise Riddell brand will be key. I have been able to bring quite a bit of exposure to our pension model over the past 2 years and will continue to do so. Industry experts are continuing to advocate for a shift to this type of model and we will be at the forefront of that movement. Our model has 15 years of proven experience at the individual client level and we will use that success to be a leader in reforming what is considered the norm. Q. What changes have you seen over the past few years? The introduction of wellness programs are becoming a huge part of the benefits provided by employers to their employees. There is everything from exercise programs and yoga classes, to smoking cessation programs and transit options. With this great initiative, should be the financial health of their employees. Improving their financial wellness will actually benefit employers tremendously as there is a strong link between how financially prepared an employee feels and how healthy, engaged and productive they are. Q. Wise Riddell were recently awarded Top 20 Outstanding Independent Offices, what other highlights have there been over the past 12 months? We have had a resurgence of youth in our office. Even though there is still some grey-hair hanging around, we have hired some young, enthusiastic individuals that really bring a lot of life to the office. It is this energy and enthusiasm that continues to drive us forward and provide that on going service to our clients. In terms of recognition, I was also able to have one of our clients featured in Pension & Benefits Monitor Magazine. The article was a discussion of our pension model and how it has positively affected their business over the years. This was great exposure not only for the client and the work that they do, but for us to show how our model has been perceived in a Defined Benefit pension plan dominated industry. Their Defined Contribution plan has risen to the challenge of competing with the other big players on the block, a great achievement.
ARISE Q. Will you tell us more about the processes you are applying this year… Our group retirement process, which was conceived 15 years ago, now services over 1,200 individuals across 5 different plans. Even though the process has refined itself over the years, the idea of creating a plan for individuals within a group hasn’t changed and continuing to provide quality one on one advice is our goal. Our model or process was built on the acknowledgement that regardless of your level of income or retirement savings, a road map was critical. The goal initially is to make sure all employees are given the opportunity to meet with an advisor on a regular basis so that they, not only had a game plan geared toward their particular situation, but also regular follow up to make sure they are still on track. The next step will be to take this process to the digital landscape using “skype-like” tools to bring the process to remote locations as well. Q. What defines Wise Riddell as a Gamechanger? How do you stand out from the crowd? Our clients have more money than the average pensioner…plain and simple and meaningful results. The client noted above is a perfect example. They have a good pension plan. The contributions to the plan exceed the industry average by approximately 65%. However, the average assets per member in the plan exceed the average by 260%! Our process has allowed the members to see in real dollar terms the benefit of having a plan and sticking to the plan. We have changed what is perceived to be a, “set it and forget it” mentality when it comes to group retirement savings plans. By taking the time to sit and meet with individuals and build them an personalized plan, we have been able to achieve participation rates that far exceed the industry average. We are the only firm in Canada, that we are aware of, that is actively using an individual planning approach for our pension clients. As I have mentioned before, there are many other advisors that say that they will provide the one on one advice, but we are the only ones delivering on the claim. Q. In your opinion, what are the key attributes to fit the “Gamechanger” title? In my opinion you need to be at the top of your game and paving the way for those behind you. This means leading by example and showing a team, or an industry for that matter, that what you are doing is best way for everyone concerned. In our case, we are changing lives, plain and simple. There are people that had absolutely no direction, no interest and no ability to understand their finances. By changing the way the group retirement plans are managed, we have increased the financial understanding of members, but most importantly the industry is taking notice that providing advice to members is in everybody’s best interest. Gone are the days of letting people figure it out on their own, the opportunity for companies to offer advice is here and we are living proof of it. Q. What motivates you as a business? It isn’t altruism, but it’s a close second. If you can improve someone’s circumstances and get paid to do it, it is very emotionally and financially rewarding. If you were to show a farmer that changing the his methodology would produce a harvest 2 to 3 times greater than doing it the conventional way, why would you not share that message. Furthermore, if your income was directly connected to the farmer’s crop yield, wouldn’t that further motivate you to encourage him to adopt to your process and to speak to other farmers? And, I think everyone would view it as fair. Our measurement is in terms of asset growth much the same way our clients measure their success as well. Q. What does success mean to you? Success means different things to different people. The desire to be successful is what gets me out of bed each morning and puts a smile on my face. But success has to be a shared experience. Success is a happy client with piece of mind enjoying a fulfilling retirement. Success is seeing smiles on my family’s face and being able to spend quality time with them. If I come home to a happy family, then I am successful in my personal life. If I’m happy to get up and go to work in the morning, then I am successful in my working life. I don’t need to be the richest man in the world, just one of the happiest. Everything else falls into place! Q. What are the qualities a person must possess to be successful in business? What is your best advice to aspiring entrepreneurs and businesses out there? It is wonderful if you can come up with an idea that no one has ever thought of before, but in reality, you just have to find an existing niche and exploit its inherent deficiencies. There are many more of those opportunities than there is a chance of you becoming another Apple. Look at the Gamechangers like Walmart or Starbucks who found a niche in an existing market and exploited it. As a person, you need to be perceptive to the opportunity and persistent as there are always obstacles to doing something non-traditional. In business, if you have done your homework, the word “no” usually means “I don’t understand”. Never take “no” for an answer, take it as the need to reframe the solution. Q. Where do you see yourself in 2020? I see the company being able to grow exponentially over the next 5 years, but I want the growth to be smart growth. I won’t yet be 40 in 2020, and this is my career, and as it has been for me, hopefully an opportunity for my children to take it to the next level when I’m ready to refine my golf-game…but not just yet. Q. What does the future hold for Wise Riddell? We are a family business with my brother and myself now heavily involved in the day to day operations and the “founders” still very active. Managing the transition while managing the growth will be imperative. Look to us to reshape the pension landscape and revolutionize the delivery process.
BIRCHAM DYSON BELL QUARTERLY REVIEW OF THE HIGHS AND LOWS FROM THE UKâ€™S LEADING ENTREPRENEURS
PWC ADJUSTING THE LENS ON ECONOMIC CRIME
Entrepreneurs keep calm and carry on in the run up to Brexit referendum s
70% would feel starting a new business ahead of a potential Brexit
Leading London based law firm Bircham Dyson Bell has released the findings of its third Entrepreneur’s Optimism Index (The Index), revealing that confidence amongst UK entrepreneurs continues despite the impending EU referendum. An impressive 86% of UK business leaders believe that they will be profitable in the next three months and over three quarters believe consumer demand will increase – showing that entrepreneurs are not daunted by the uncertainty caused by the upcoming vote. The Index, published quarterly and supported by Rockstar Mentoring Group, tracks the opinions and levels of optimism amongst entrepreneurs in the UK. The Index surveys over one hundred businesses on key issues, including current and predicted performance, recruitment plans and business prospects – enabling it to track whether optimism amongst entrepreneurs is improving, diminishing or remaining the same. This quarter The Index also surveyed sentiment amongst business leaders on the new National Living Wage which came into force on 1 April 2016. The key findings of this quarter’s Index are: s s s s s s s
86% of entrepreneurs believe they will be in the next three months. starting a new business in the next three months – ahead of a po 70% of UK entrepreneurs would feel tential Brexit. Over three quarters (76%) of businesses believe consumer demand will increase over the next three months with 59% of entrepreneurs having reported an increase in customer levels in recent months. Despite the new National Living Wage, 69% of entrepreneurs have employed new staff in the past three months and over half will recruit more staff in the coming months. Over half (54%) have seen an increase in turnover in the past three months – a 4% increase on the October 2015 Index results. 24% of businesses have increased funding in the last quarter with crowd funding growing most rapidly as a source of funding – 6.25% compared to 2.33% in the October 2015 Index. Only 14% of those surveyed believe the National Living Wage will have a negative impact on their business.
Commenting on the findings, Hollie Gallagher, Head of the Entrepreneurs Team at Bircham Dyson Bell said: “The British economy is reliant on British business and the Index has given us a valuable insight into what the entrepreneurs leading these businesses forecast for the uncertain months ahead of the EU referendum. Our third Entrepreneurs Optimism Index shows that start-ups and serial entrepreneurs are remaining resilient and optimistic at a time of economic uncertainty – with an increased number having sought additional funding and employing new staff, and many looking to further expand.” Stuart Thomson, Head of Public Affairs at Bircham Dyson Bell said of the attitudes of entrepreneurs in the current political and economic climate: “This year could see unprecedented political and economic upheaval and we have already seen significant uncertainty for businesses in the first quarter. Amidst fears over the impact of a vote to leave the European Union, market turmoil and the implementation of the National Living Wage, it is extremely encouraging that UK entrepreneurs have maintained a positive outlook and businesses are growing.”
ENTREPRENEURS OPTIMISM INDEX A quarterly review of the highs and lows from the UKâ€™s leading entrepreneurs Edition 3 | January - March 2016 Gamechangers 100
MORE INFORMATION / CONTACT DETAILS MORE / CONTACT DETAILS Team, BDB Hollie INFORMATION Gallagher, Head of Entrepreneurs E firstname.lastname@example.org T +44 (0)20 Hollie Gallagher, Head of Entrepreneurs Team,7783 BDB3520 www.bdb-law.co.uk E email@example.com T +44 (0)20 7783 3520 www.bdb-law.co.uk Stuart Thomson, Head of Public Affairs, BDB E firstname.lastname@example.org T +44 (0)20 Stuart Thomson, Head of Public Affairs, BDB 7783 3439 www.bdb-law.co.uk E email@example.com T +44 (0)20 7783 3439 www.bdb-law.co.uk Toby Richards-Carpenter, Associate, BDB E firstname.lastname@example.org Toby Richards-Carpenter, Associate, BDB T +44 (0)20 7783 3759 www.bdb-law.co.uk E email@example.com T +44 (0)20 7783 3759 www.bdb-law.co.uk Jonathan Pfahl, Managing Director, Rockstar Mentoring Group E firstname.lastname@example.org T +44 (0)8456522905 Jonathan Pfahl, Managing Director, Rockstar Mentoring www.rockstargroup.co.uk Group E email@example.com T +44 (0)8456522905 www.rockstargroup.co.uk © Bircham Dyson Bell LLP 2016 50 Broadway London 0BL © Bircham Dyson BellSW1H LLP 2016 T (0)20 7227 7000SW1H 0BL 50+44 Broadway London www.bdb-law.co.uk T +44 (0)20 7227 7000 www.bdb-law.co.uk
FIND US ON FIND US ON
Do you think the National Living Wage of £7.20 per hour will have a positive or negative impact on your business?
Do you currently pay your employees:
London Living Wage – £9.40
UK Living Wage – £8.25
54% not sure
Penrose Care credit a large part of their success to the workforce that has grown alongside them, Robert Stephenson-Padron, co-founder and Managing Director explains: 'At Penrose Care we believe that if we are to fulfill our mission, of providing home care with a human touch, then we have to employ the best care professionals in the sector. We feel that we have just that team, and have built this up by focusing heavily on looking after our staff. We train our staff to ensure that they are up to date with all Skills for Care recommendations (not just the obligatory ones). We strive to create a good working environment and ensure that our staff are paid well, in fact we are one of only a few Living Wage employers in the home care sector.' 'Investing in our people recognises what valuable assets they are to us and that is why we are a Living Wage employer. All our employees earn at least a Living Wage, ensuring our staff as a minimum receive compensation that allows them to live decently.' 'As with most start-up businesses, becoming an accredited Living Wage employer was a milestone of success. The voluntary Living Wage is a
10 Gamechangers 102
National Living Wage – £7.20
benchmark, a sign of being a decent employer, and those businesses that can should invest in their workforce and ensure they are paid enough to live on.'
More than 2,000 organisations have now been accredited as Living Wage employers, voluntarily rewarding their staff with a fair day’s pay for a hard day’s work.
Sarah Vero, Director, Living Wage Foundation
'We join a movement of other employers who pay the Living Wage, and it’s not just good for employees, it’s good for business too. Reduced absenteeism, low turnover of staff and increased productivity are just some of the benefits we, and many other Living Wage employers, report following accreditation. More and more our customers expect that we would reward our staff fairly too. I would encourage other entrepreneurs and business owners to consider if they can work towards becoming a Living Wage employer.'
Robert Stephenson-Padron, concludes: 'To be caring at its foundation, Penrose Care have put in place the Living Wage as a cornerstone of the way we work. The results have been a care company which attracts people with a genuine vocation to care, rather than people who have no choice. Penrose Care is growing, our customers are ever more satisfied and our staff morale is always high. It makes it a pleasure to run the organization.
that we care about them as human beings, and I would encourage all employers that this is an opportunity to take a step in the right direction towards paying staff a wage they can live on, and moving away from a business model where wages cling to statutory minimums' For more information about how the voluntary Living Wage rates are calculated, and how you can accredit your business, please visit www.livingwage.org.uk
My work at Penrose Care has proven to me that paying the Living Wage is a credible message to our employees What do you think the main benefits of the National Living Wage will be?
Easier to recruit Improved reputation
Increased productivity Improved employee morale
Stay the same
What is your main concern about the implementation of the National Living Wage? 60
Reduced investment in other areas of business Reduced rewardpackages/benefits Reduce recruitment Lead to job losses
Increase labour costs 40
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we want to be nimble and agile and to be able to take risks and evolve, we can’t be a huge organisation. Our business plan is to work with partners who can take our product to market.
DO YOU THINK THERE ARE SIMILAR TRAITS IN ENTREPRENEURS? We’re definitely risk takers, but a calculated risk taker is key to ensuring that when you do roll the dice you try to get them weighted in your direction. Taking risks for the sake of it just won’t work, but having the freedom to do what you want is what I enjoy most.
We’re definitely risk takers, but a calculated risk taker is key to ensuring that when you do roll the dice you try to get them weighted in your direction.
Keiron Sparrowhawk, Founder, Chairman and CEO of MyCognition
learner to improve their cognition – training the brain holistically.
WHAT ARE YOUR PLANS FOR MYCOGNITION? They’re long term as there’s so much to do. We’re at the stage of assessing and enhancing cognitive function and are in a very similar position to the pharmaceutical industry in the 1920s/30s. Then there were only a few drugs working and people were making claims with little evidence. Many companies collapsed yet those who persisted and researched did very well. Studies and clinical trials enabled (initially) sales-based organisations to become marketing organisations. They were able to prove their studies with substantial evidence and that’s what we believe in at MyCognition – we’re the good guys building evidence to support our claims, we’re very much a researchbased organisation taking the lead from the market. It could take over ten years and we still may not finish the job. I may not be the best at everything and new people will have to be brought on board. What I do know though, is that I wouldn’t want MyCognition to grow into a large commercial organisation with more than 150+ employees globally. We need local people to look after their local market, globally, but if
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WHAT DO YOU THINK YOU’VE LEARNED OR WOULD PERHAPS DO DIFFERENTLY? I’ve learned not to spread myself too thinly and the importance of bringing in people with the knowledge and skills you need, but, at the same time ensuring you overlap with each other just enough to know what’s going on. I always thought in business you should surround yourself with people who are smarter than you. We’ve all got skills and we need to nurture those we don’t have. We must also give people the space to grow and develop the ones they do. If you’ve got an entrepreneurial bone in your body, then I always say to go for it. In some ways I think it would have been nice to have started earlier, but then there’s research that says some of the most successful entrepreneurs are those in their 40s, and we shouldn’t lose sight of that. People in their 40s and 50s have valuable experience and wisdom they can put to use in a business or impart to others.
IS THERE EVER AN END POINT? I don’t think so. It took me 27 years to learn that I wasn’t suited to a corporate world. If you do something you enjoy and you’ve nurtured the skills you have, then you have a responsibility to use them and to not let them end with you.
THE LIVING WAGE A huge variety of businesses are part of the Living Wage movement, but what connects them all is their commitment to recognising the value of their staff, and seeing payment of the voluntary Living Wage as a mark of success for their business model. The entrepreneurial team behind Penrose Care is an inspirational pair, Robert Stephenson-Padron and Dr Matthew Knight; passionate about reform in the home care sector, but also committed to developing and rewarding staff. Penrose Care is a home care provider established in 2012 as a direct response to what they perceived as a need to fundamentally reform the home care sector in the UK. Inspired by their experience of health care excellence throughout their careers; Robert Stephenson-Padron was a
health care analyst and Dr Matthew Knight was a local hospital physician, and by their own personal experiences within their families. The vision of Penrose Care is to deliver excellent and professional home care services to clients combined with compassion so that all those that are cared for feel cared for. Fast forward to 2016 and Penrose Care now offer home care across London.
Penrose Care credit a large part of their success to the workforce that has grown alongside them.
Robert Stephenson-Padron, co-founder and Managing Director, Penrose Care
The Living Wage is an hourly rate, set independently and is based on the cost of living. The current Living Wage is £8.25 per hour, and in London, £9.40 per hour, recognising the higher cost of living in the capital. The new minimum wage rate, referred to by government as the ‘national living wage’, will be £7.20 per hour. This will increase each year, with the aim of reaching 60% of the median wage across the country by 2020 (this would mean around £9 an hour, but the Low Pay Commission will consider what the market can bear). The Living Wage will increase in line with the cost of living, with new rates announced in Living Wage Week every year. The Living Wage is for all employees over the age of 18, whereas the new enhanced minimum wage rate is for over 25s only. Sarah Vero, Director, Living Wage Foundation explains: 'More than 2,000 organisations have now been accredited as Living Wage employers, voluntarily rewarding their staff with a fair day’s pay for a hard day’s work.' 'Increasingly consumers are recognising that the Living Wage accreditation is a mark of responsible business. Accredited businesses range from FTSE 100 organisations like Unilever to growing high street names such as Oliver Bonas, as well as hundreds of SMEs from bespoke umbrella makers, to care providers, scent producers and online retailers.'
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MY LIFE AS AN ENTREPRENEUR As part of a growing generation of 'grey-entrepreneurs', Keiron Sparrowhawk, Founder, Chairman and CEO of MyCognition, a leading provider of personalised cognitive training programmes, used his experience in the pharmaceutical world to seize an opportunity to try and change the lives of many, developing and training cognition to enhance its function and reduce deterioration. Keiron talks to BDB about his life as an entrepreneur:
FIRST OF ALL, CAN YOU EXPLAIN ‘COGNITION’? It’s a term used to describe your ability to plan and organise, problem solve, remember things and focus; everything you do in your mind. Cognition has an impact on every aspect of our lives, including our ability to learn and cope with everyday situations.
WHAT IS MYCOGNITION AND HOW DID YOU START IT?
Keiron Sparrowhawk (Founder, Chairman and CEO of MyCognition) www.mycognition.com T +44 (0) 7753 368 788 E firstname.lastname@example.org
MyCognition is a science-based company which aims to change people’s lives by measuring and improving their cognitive function, and we do this through adaptive and engaging training games and assessments. The original inspiration was to improve the quality of life for individuals with cognitive deficits due to conditions such as Alzheimer’s and Parkinson’s, however the broader benefits of enhanced cognitive function in education, business and health soon became clear, broadening our purpose. As with many journeys, things didn’t always run as expected. In the early days of our conception we were asked by a Principal in a school in the Netherlands to run studies with younger people to see if we could improve their cognition. We met, and started our venture within education. It was at this point, when we could see there were many potential opportunities in sectors such as healthcare, education and business generally, that we knew we had to agree a core focus for the company. We decided to concentrate on deficits
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in cognition and to look at how we assess those deficits and train them to make them better or at least reduce the speed of any decline. With children we worked in particular within special educational needs and with businesses we focussed on individuals who suffered from poor cognitive function, which can manifest itself as depression. For example, on average 1 in 4 people will suffer from mental illness at some point in their lives, and many do not realise until it’s too late. Our mission was to develop a means to measure and monitor their cognitive function, looking for signs of deterioration, and we also developed interventions to help people to enhance their cognition.
WHAT DREW YOU TO THIS AREA? I first started in neuroscience research and development (R&D) within the pharmaceutical industry. We worked on numerous successful drugs for health conditions such as migraine, epilepsy and depression. I studied for my masters in the neurophysiological basis of behaviour, and one thing I was taught was that the brain was a static organ, that it would develop to a certain stage and then deteriorate; which of course we now know is not true. In fact, it acts in the same way as any other organ, and even more fantastic is its ability to renew, regenerate and regrow. After 11 years of R&D I moved onto the commercial side of drug development, learning about the strategy and tactics of pricing, which I really enjoyed. It was a great way to learn the value of a product and what
To me the idea of remaining where I was seemed like a greater risk than trying to set up by myself...
Keiron Sparrowhawk, Founder, Chairman and CEO of MyCognition
you had to build into it to ensure it was worth the investment to discover and develop it. In 2002 half of my commercial team were made redundant, and that was the time I realised I would rather take the leap on my own. In 2003 I left to become an entrepreneur and started a company with a colleague based in Philadelphia.
WERE YOU EVER WORRIED ABOUT STARTING ALL OVER AGAIN? To me the idea of remaining where I was seemed like a greater risk than trying to set up by myself, so at the age of 45 when I should have been thinking of pensions and job security, I instead threw caution to the wind to do something else and start again. It took a long time for me to realise my potential but after 27 years in a corporate industry I finally felt I could truly change the world with our work. My first business – PriceSpective – with my colleague in Philadelphia, grew from two to six people over three years, and eventually to 90 people by 2012. Joining groups like the Entrepreneurs Organisation really
helped to give me confidence and support – although having a younger crowd - some in their early 20s already established as serial entrepreneurs - was particularly eye-opening!
HOW DID YOU COPE WITH SUCH A RAPID GROWTH? We brought in two new partners based in the US so that our US business could grow, and I managed the UK. However, this came with its perks and its downfalls. My three US business partners came with quite a different mind-set. We ended up with six offices in the US and only London elsewhere. The business was successful, but our differences were clear and with little room for further development, we parted in 2012. When we did sell, I already knew I wasn’t the type of person to retire and sit on a beach. I had my next venture in mind and I was excited to start something new on my own.
HOW DID YOU THEN MOVE TO MYCOGNITION? Returning to my background in neuroscience, I knew I wanted to work
to bring about greater benefits to patients. Many cognitive enhancing drugs for conditions such as schizophrenia and depression have side effects which the positive efficacy doesn’t always overcome. In an industry where 'every answer’s a pill' I knew there had to be a better way and it needn’t be resolved with a drug. In the early 2000s I recalled seeing an MRI scan with someone playing a computer game and various parts of the brain lighting up. It made me think what would happen if you were to direct that impact? I spoke to a few experts in cognition who said that provided we developed a means to assess people, we could direct training to them. They were keen to support me in embedding training into a video game – as this would encourage compliance by being fun at the same time. Since then we have developed MyCQ, an online measure of cognitive function which combines 200 years of psychological research in a selfadministered online assessment. In our products the assessment is integrated with engaging, adaptive computer games which help the
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Osborne’s move as a way of wrongfooting the Labour Party and giving credence to the Conservative Party’s claim of living the ‘One Nation’ dream. However, the reaction from businesses has been much more muted. They appear less keen on Osborne as a political strategist and more interested on what it means for them. The views of businesses captured by the Index show that they are not clear on what the impact will be – uncertainty is abound. They can see improved employee morale as a
result, but fewer believe it will increase productivity, and the potential impact on reputations is similarly hard to call. The Chancellor will be hoping that the fears about the National Living Wage will be misplaced as they were before with the introduction of the Minimum Wage in 1999.
2016 could be a year of major political and economic upheaval.
Stuart Thomson, Head of Public Affairs, BDB
However, given the economic and political uncertainty and the continued drive on austerity, any shifting on the cost to the consumer, particularly if that consumer is the public sector, could have major ramifications.
CONFIDENCE CONTINUES TO GROW – DATA SNAPSHOT Past 3 months
Next 3 months
report an increase in customer levels
contract staff and
have employed new staff Ó3 24% increased funding
report an increase in revenue
believe they will recruit
believe they will be profitable
70% 76% Ô4
would feel confident starting a new business
believe consumer demand will increase
THE FINDINGS Bircham Dyson Bell’s Optimism Index tracks the highs and lows of opinion from those who have founded and run businesses in the UK. These businesses are the core to the British economy, and their confidence and ability to grow has a subtle, but important, link with overall economic stability. Supported by Rockstar Group, the index tracks optimism through a consistent set of questions put to a database of UK business owners across a wide variety of sectors and
locations. Each quarter, the index will compare these results and trends in market conditions. In January 2016, 107 respondents completed 15 questions on a range of business issues, from current and predicted performance to employment, business prospects and finances. In this edition we ask our entrepreneurs whether the introduction of the National Living Wage would have a positive impact on their business.
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THE HIGHLIGHTS Key July - September 2015 October - December 2015 January - March 2016
Where do you source your funding? 200
Where does your business come from? 100
Face to face
How will the economy look in the next 3 months? 120 100 80 60 40 20 0
Stay the same
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Based on these increased levels of business, our entrepreneurs have predicted that over the next quarter both consumer demand...and the economy...will continue to improve.
Hollie Gallagher, Head of Entrepreneurs Team, BDB
entrepreneurial businesses still require funding as they continue to grow, but are not seeking such vastly disproportionate quantities which could signal an impending downward spiral, over-zealous projections or indeed could indicate negative gearing. The use of crowdfunding has been increasing rapidly – 6.25% compared with 2.33% in the October poll. Shareholder funding has also increased and has now exceeded the level of government funding.
A POLITICAL PERSPECTIVE – 2016, A YEAR OF RISK? 2016 could be a year of major political and economic upheaval. With the referendum on the UK’s membership of the EU now confirmed for June, the focus of politicians will be on whether we are ‘in’ or ‘out’. But added to that, the Budget (16 March 2016) has caused major ructions in the Government and a series of elections
in May – Mayor of London, Scotland, Wales, Northern Ireland and locals as well. Through all of these events, the Government has to demonstrate continued faith in its economic approach and ability to deliver growth. However, the findings of the latest Index shows that the undoubted optimism of recent months seems to have slowed. This could be blamed on the period of uncertainty that we are now entering and also the fact that no-one really knows what will happen in the event of Brexit. There are arguments to be had about the economic impacts – positive or negative – and what is less clear is how the UK would unpick itself from the EU. What regulations would remain in place for businesses? Against this backdrop are also changing business environments, especially with the introduction of a National Living Wage. Many saw George
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One third thought the implementation of the National Living Wage would have a positive impact on their business...
Stuart Thomson, Head of Public Affairs, BDB
With the introduction of the National Living Wage – 1 April 2016 – this edition polled entrepreneurs on the likely impact this would have on their business and continuing the focus on employment as an indicator of success. Interestingly, almost two thirds of those surveyed already pay their employees not only higher than the National Living Wage of £7.20 per hour, but also the UK Living Wage of £8.25 per hour and the London Living Wage of £9.40 per hour.
Almost 60% of our entrepreneurs had seen an increase in customer levels over the last 3 months, which begs the question – where is this drive for business coming from? Whilst online and face-to-face channels remain the strongest, and responsible for one third each, there has been a decline in business deriving from stores, which has fallen to 3.92% (from 5.13% last July). As we have seen, this is not due to an overall decrease in business, rather a shift to more lucrative channels with smaller overheads (eg rent and insurance premiums, which can be stiflingly costly when taking leases over commercial property). In fact, online retail sales have reached such a level in the UK that we are now the most frequent e-shoppers in Europe.
One third thought the implementation of the National Living Wage would have a positive impact on their business, with almost three quarters thinking it would improve employee morale, half thinking it would improve productivity, and more than half thinking it would improve the reputation of the business which in turn would, amongst other things, facilitate future recruitment. Those polled who thought that the National Living Wage might have a negative impact on their business were in the minority (14%) and cited concerns that it might increase labour costs but did acknowledge that it would probably not lead to job losses, reduced recruitment, a negative impact on reward-packages or benefits, or reduce investment in other areas of the business.
Based on these increased levels of business, our entrepreneurs have predicted that over the next quarter both consumer demand (59% of those polled believe) and the economy (one third of those polled believe) will continue to improve.
FINANCIAL STABILITY Whilst 24.3% have increased funding over the last 3 months, up from 21.09% in October, most have been keeping their funding levels stable (70%). This is good news –
46% aged 45+
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ENTREPRENEURS KEEP CALM AND CARRY ON IN RUN UP TO BREXIT REFERENDUM GRASS ROOT GRIT Over the last 9 months we continue to see a high amongst entrepreneurs with only 7% of those surveyed claiming they would not feel confident starting a new business in the current economic climate. This echoes the results from the previous two editions in which our savvy start-ups and serial entrepreneurs confirm that business really is booming from a grass roots level.
INFLATED OPTIMISM? Is this optimism well founded, or is it just entrepreneurs being as plucky in polls as they are known to be in their day jobs? For example, 42% of those questioned were 'very' confident that their business would be more profitable in the next 3 months. So we looked at the figures, and more than half of our entrepreneurs had seen an increase in turnover over the past 3 months, representing a 4% increase on the October 2015 results.
WHISTLE WHILE YOU (INCREASE THE) WORK(FORCE) Of course, our entrepreneurs are not making this stoic progress singlehandedly. In fact, almost one third had employed new staff in the past 3 months, another key indicator of the investment into their business and certitude in its ability to produce a return going forward. Indeed, more than half had plans to hire additional employees in the next 3 months and, further still, nearly a third said that this would be in full time roles, which is up from 22% from the July 2015 poll. This promising rise allows the delegation of day-to-day tasks to be undertaken by specialist workers, whilst the strategy of the business can be focussed on by those in the know – a win-win situation for all and conducive to a stream-lined and efficient start-up.
...more than half had plans to hire additional employees in the next 3 months and, further still, nearly a third said that this would be in full time roles...
Hollie Gallagher, Head of Entrepreneurs Team, BDB
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This publication is not meant as a substitute for advice on particular issues and action should not be taken on the basis of the information in this document alone. This firm is not authorised by the Financial Conduct Authority (the FCA). However, we are included on the register maintained by the FCA (www.fca.gov.uk/register) so that we can offer a limited range of investment services (including insurance mediation activities) because we are authorised and regulated by the Solicitors Regulation Authority (the SRA). We can provide these services if they are an incidental part of the professional services we have been engaged to provide. Mechanisms for complaints and redress if something goes wrong are provided through the SRA and the Legal Ombudsman.
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ADJUSTING THE LENS ON ECONOMIC CRIME: PREPARATION BRINGS OPPORTUNITY BACK TO FOCUS
Cybercrimes like data breaches are getting lots of attention these days. But does the average company need to worry about them? The answer is a resounding yes, according to a survey from PricewaterhouseCooper, which found that cybercrime has become the second most common type of economic crime. Of the 6,000 executives across the world who participated in the survey, 38 percent reported that their organizations dealt with economic crime in the last 48 months. Cybercrime increased big time, with 32 percent reporting an incident in the last two years. That’s an 8 percent increase from a year ago. Cybercrime was up and is now the second-most-reported type of economic crime (asset misappropriation is No.1). Cybercrimes can cause major losses, according to the report. Of the respondents affected by cybercrime, about 15 percent reported losses of more than $1 million; 2 percent reported losses in excess of $100 million. Despite this potential for losses, many boards of directors aren’t focusing on cybercrime. Globally, just 27 percent of boards request information about the company’s state of cyberreadiness more than once a year, the report found.
The survey, The PwC Global Economic Crime Survey 2016, is available here. (http://goo.gl/zN3of6)
GameChangers™ is a network for today’s most influential organisations and individuals. We offer insight into every facet of leaders’ professional lives by telling their stories - from department structure and team management to intellectual property and emerging technology. With engaging editorial, we bring local and global innovators across industries together to share their stories, learn from each other and connect. GameChangers™ is an opportunity for you to become a part of the larger corporate community by discussing your work from your perspective. By conveying these successes, our goal is to create a space for all leaders to share and learn as we all navigate an increasingly complex business environment. GameChangers™ welcomes news and views from its readers. Correspondence should be sent to firstname.lastname@example.org For more information about GameChangers™ visit www.acq5.com/posts/gamechangers/ GameChangers™ Copyright © 2016 GameChangers™ No part of this magazine may be reproduced, stored in a retrieval system or transmitted in any form without permission. .
GameChangers™ is a network for today’s most influential organisations and individuals. We offer insight into every facet of leaders’ profess...
Published on Jun 1, 2016
GameChangers™ is a network for today’s most influential organisations and individuals. We offer insight into every facet of leaders’ profess...