M & A Rainmaker

This is a great little blog on

http://onstartups.com/

have a read !!

Cloud Computing is destined to be one of  the most active Hi-Tech sectors for Mergers & Acquisitions in the U.K. in 2011 according to this article

http://www.itpro.co.uk/629173/cloud-computing-companies-to-boost-m-a-in-2011

which comments on Deloitte’s bi-annual survey of U.K. based Hi-Tech companies.

Within Cloud Computing Hosted Telephony and Unified Communications is one of the growth niche’s.

Innovative companies like FutureLine, which is being supported by Cisco Systems, are addressing specific market segments e.g. Highly distributed SMB’s.

A Cisco spokesperson said:

“We are seeing an increasing demand for managed and hosted solutions in the voice space and this is especially the case for smaller businesses with less than 20 employees. FutureLine have a refreshingly new approach by addressing the key fundamentals of quality, security and ease of use and deployment. This is all underpinned by partnering with Cisco who fully understand how to manage different media provided by the various consumption models.”

Andy Brocklehurst
RSM Cisco Small Business

Written by Guy Rigby, Head of Entrepreneurship at Smith & Williamson

http://www.smith.williamson.co.uk/entrepreneurs

Family and friends are a great source of funding for start ups and early stage businesses, but raising money from external investors or business angels is challenging.

Here are ten of the key issues that investors will be considering when they meet you or read your business plan.

1. First impressions

First impressions are critical. Most investors will decide not to proceed within the first 30 seconds of any discussion, or within a minute or two of picking up your business plan. Think about your approach, test in on your friends and practise it to perfection. Don’t fall at the first fence.

2. Demonstrable need

Where is the pain and what exactly is the need for your particular product or service? Most businesses offer ‘me too’ opportunities which are not obviously exciting to an investor. Make sure it’s clear how and why yours is different. Is it better, faster, cheaper or is there some other reason why you will succeed when many others fail?

3. Existing Revenues

Raising money for a business with pre-existing revenues is far easier as demand for your product or service has already been partially proven. The fact that you have already established the beginnings of a customer base will carry huge weight in any discussions.

4. Strategy

You may have a great idea, and you may have existing revenues, but what is the future for your business? Do you have a vision? If so, is it realistic or just “pie in the sky”? We have all seen those hockey stick shaped graphs showing an embarrassment of riches only a year or two down the track. Don’t be tempted to over-promise and under-deliver. It’s normally transparent from the start.

5. Business plan

The credibility of your proposal will be reflected in the quality of your business plan. A poorly presented, badly researched plan will kill your proposal before it has a chance. An idea may be good enough to gain the backing of family and friends, but it won’t cut the mustard with any serious investors.

6. Business model

Your business model will determine how and where you make your profits and how you will build long term value in your business. A model that requires huge revenues to deliver small profits is inherently unattractive, whereas a business in a niche market with high barriers to entry will be of interest to potential investors.

7. You

Are you credible in the eyes of the investor? What is your track record and what experience do you have of your business? Most successful entrepreneurs “stick to the knitting”, creating businesses based on their passion (ie something they know and understand), personal knowledge or experience. If this is limited, get the support of a mentor or partner. This will demonstrate maturity in the eyes of your investor.

8. Financials

Businesses go bust because they run out of cash, so be sure to demonstrate a good understanding of your financials. Margins and overheads will be part of the discussion, as well as working capital and cash flow. Remember that small businesses are normally cash constrained and prone to overtrading, so the investor will need to understand how you will manage this.

9. Pricing

Don’t be tempted to overvalue your business. We are a long way from the heady dotcom days when investors were persuaded to part with large amounts of cash based on little more than an idea. Nothing will put an investor off more quickly than an excessive or unsupportable valuation. The more you need, the more you will have to give away, so be realistic, cut your cloth and take in as little external funding as possible.

10. Exit

It’s very easy for an investor to put money into your business, but how will he get it back? A vague idea that you would like to buy his shares back at some future date is unlikely to be attractive. Taking in external funds means that you need to “begin at the end” in terms of thinking about exit, having a clear strategy and plan. This may change as the business grows, but you need that stake in the ground.

These are just some of the issues an investor will be thinking about, often subconsciously, in the short time that he focuses on your business. If you’ve thought it all out beforehand and you can tick all the boxes, you will have a strong chance of success.

Good luck!

A friend of mine Evert Bopp is pulling together a team and equipment to help re-establish communications in Haiti.

If you know anyone that can help here is the list of equipment that they need:

http://haiti-connect.org/what-do-we-need/

Please pass this on to anyone who you think may be able to help or may know anyone that can help.

Thank you.

H2O Car Valeting has recieved a £5 Million Loan backed by the SBLGS see more here

http://www.birminghampost.net/birmingham-business/birmingham-business-news/automotive-business/2009/12/31/car-valeting-group-making-a-tidy-future-65233-25499988/

The M&A Rainmaker has been made aware that Government backed funding and loans  are available to small and medium sized businesses in the Birmingham and West Midlands area.

Discussions with experienced and long established Birmingham based consultancy Genesis Consulting have revealed a particular interest in supporting High Technology ( ICT and Advanced Manufacturing ) companies.

Typical companies might be small ICT start-up teams or ICT companies with a product and intellectual property who need assistance in developing and selling thier products and services.

Other examples might be established Engineering companies of around £1 Million turnover who are seeking to take thier business to the next level.

For further information and an informal discussion contact us here at M&A Rainmaker or give Arun Luther a call at Genesis on 0121 681 6880 and mention M&A Rainmaker.

M&A Rainmaker can provide business strategy, sales and marketing support to complement these loans and grants.

A useful article and reference in Fresh Business Thinking ( which is a great site )

http://www.freshbusinessthinking.com/business_advice.php?AID=4248&Title=Finding+Capital+To+Fund+Growth+Or+A+Turnaround+

according to

http://www.techcrunch.com/2010/01/03/top-ten-digital-deals-2010/

This is an interesting review from Icon Corporate Finance of Q2 M&A activity and mentions 365iT as being on the acquisition trail which it is for selected companies that fit the portfolio, such as the acquisition of 5i earlier this year and the very recent acquisition of 7 global.

http://www.iconcorpfin.co.uk/NewsEvents/M&ATechnologyReviewQ22009.pdf

VCR Directory Online is a searchable database of information on 3,000 investors in unquoted businesses across Europe and Israel including business angels, venture capital firms, private equity houses, secondary fund managers and corporate venturers. Go to

https://www.vcrdirectory.co.uk/

for more information.