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After a slow start, it is good to see that the Business Growth Fund (BGF) invested £120m in 24 companies in 2012 with 3 in the Midlands: £10m in GCI Telecom, £3m in Shuropody and £4.8m in Wow! Stuff.
BGF is planning to invest £200m in 2013, typically in tranches of £2m to £10m taking a minority stake and Board seat. BGF is a good alternative to bank debt for fast growing businesses seeking development capital.
At last some good news from the Chancellor! The Autumn Statement now confirms that under EMI (Enterprise Management Incentive) share options, it will not be necessary to own at least 5% of the Company’s shares to qualify for a 10% Capital Gains Tax rate under Entrepreneurs’ Relief provisions.
Currently, EMI options qualify for tax relief, which provides for any growth in the value of shares to generally be exempt from any income tax. Any gain arising on the subsequent sale of the shares via the exercise of a qualifying EMI option is generally subject to Capital Gains Tax at 28%
Under the new rules, Capital Gains Tax arising from the sale of shares which were previously acquired via the exercise of qualifying EMI options will be at the Entrepreneurs’ Relief rate of 10% so long as the EMI shares have been held for at least 12 months.
The new rules will only apply to shares sold on or after 6th April 2013 for EMI schemes set up on or after 6th April 2012.
This is good news for EMI option schemes which is a good way for owner managers to incentivise and retain key staff.
Bishopsgate has now completed a hat trick of deals involving Tropical Marine Centre, with the latest debt-only MBO that sees the TMC MD Paul West and his management team taking a controlling stake, with the deal completing on 21st December.
Bishopsgate has a 17 year relationship with TMC, selling the original business to Cranswick plc in 1995. We subsequently advised on the MBO of Cranswick Pet Products (including TMC) – a LDC backed buy-out in 2009, and the latest MBO completes the TMC hat trick.
We wish Paul West and his team well in the next stage of development at TMC, Europe’s leading supplier of ethnically sourced marine livestock and one of the world’s leading aquatic brands.
With the latest Budget announcing that UK corporation tax rate will fall to 24% next year with a further target to reduce the rate to 22%, cross-border deals are accounting for an increasing proportion of UK M&A activity.
About a third of Bishopsgate’s recent deals have been cross-border and we believe this trend will increase with Asia/India becoming more prominent. Traditionally, the bulk of cross-border activity has been focused on the US and Europe but we have seen a sharp rise in interest from Asia and this can only have a positive effect on sale prices. The UK is seen as a good place to do business and we expect cross-border activity to increase as we continue our slow path to economic recovery.
The number of deals in the Midlands fell in the first 6 months of 2012 compared to 2011 according to Experian.
The number of transactions dropped from 2,339 to 2,084 reflecting the continued drought in bank lending.
The Bishop expects the M&A market to remain subdued for the remainder of the year.
Despite this, Bishopsgate continues to have a healthy pipeline of deals and completed two transactions in June.
Despite the continued gloom in the Eurozone, Bishopsgate was pleased to announce the completion of two deals in June, the MBO of Education Personnel Management (“EPM”) and the disposal of Kingston Foods to Cranswick plc, both for undisclosed sums.
EPM provides personnel and consultancy services to over 700 schools across the UK and the funding for the transaction was provided by RBS.
The disposal of Kingston Foods represents Bishopsgate’s third deal with Cranswick plc and takes them into the fast growing food service and restaurant sector. Well done to Tom Spencer who was lead adviser on both transactions.
Bishopsgate Corporate Finance is delighted to announce the completion of two multi-million pound deals in June 2012
Kingston Foods Limited
Bishopsgate advised the shareholders of Kingston Foods on the disposal of the Company to Cranswick plc. Kingston is a producer of premium cooked and roasted meats and the acquisition strengthens Cranswick’s cooked meat production capabilities, further diversifies its product range in a growing market and broadens Cranswick’s customer base. Tony Turner and Paul Williams, the Vendors, will continue in their current positions as Managing Director and Operations Director respectively.
Education Personnel Management Limited
Bishopsgate advised on the Vendor Initiated Management Buy-Out of Education Personnel Management Limited, the UK’s leading private provider of Human Resource services to the education sector. The deal was backed by NatWest and allows EPM’s very strong management team to share in the ownership of the Company alongside its founders Bev Curtis and Maureen Cooper. Both Bev and Maureen remain fully involved in the running of the business.