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Noahs Ark chemical distributor

Price Bailey Case Study

After 20 years of building and running a successful chemical distribution company, brother and sister team Bharat and Rashmi decided it was the right time to take a step back.

As a long-standing client of Price Bailey, our team had seen the pair build Noahs Ark Chemicals to be a £60m turnover business operating across Europe through entities based in the UK, Belgium and Switzerland.

Once the decision to sell had been made, the pair were keen to move the transaction as quickly as possible against a very clear timetable. Price Bailey was engaged as the lead advisors and tasked to negotiate agreeable terms, provide tax advice, and project manage the transaction through to completion within a short timescale. Three companies, not within a group structure, were being sold that were based in three different countries and using three different currencies.

Our team worked quickly to start negotiating the most material terms, including a potentially complex convertible loan. Price Bailey also provided in-depth international tax advice. After discussing the offer for several weeks, verbal Heads of Terms were agreed in late December and then signed in the first week of January.

The Price Bailey team had been preparing and advising on the due diligence process and preparing a proforma of the completion accounts. As expected, the due diligence process was thorough and coordinating stakeholder response across the three countries was a key hurdle to transact within the timeframe. Using our experience within the sector and of the company, Price Bailey were able to provide assurance throughout the due diligence process, maintaining value.

Completion took place in early March and according to the planned timeline, and just 56 days after signing Heads of Terms.

The transaction was successful, enjoyable and moved at pace. Success came down to strong and clear negotiation from both sides, constant communication, diligent work and strong project management.

Commenting on the transaction, Bharat, the vendor, said:

“We are very pleased to have completed on the transaction and are confident we leave the company in safe hands. The Price Bailey corporate finance team were a great support to us throughout the transaction. They worked within our tight timescales and were on hand at every stage; we felt like they were as vested in it as us. It was important to have an advisor that we can trust and who didn’t just treat us like their next deal.”

Chand Chudasama, Partner, Price Bailey:

“It has been a pleasure working with the family over a number of years and seeing what they have built. We are proud to have supported the sale of Noahs Ark and enjoyed working on each of the stages. As the economy moves out of the pandemic, businesses in resilient sectors that have an international reach will become attractive targets, and this transaction just shows that it is possible to move at pace and deliver successfully.”

You can view this original Price Bailey article here

Boulder Food Group (BFG Partners

Price Bailey Case Study

About Boulder Food Group (BFG Partners)

BFG Partners is a venture capital firm that seeks partnerships with early-stage consumer product companies whose products do better for people and the planet. BFG aims to work alongside exceptional entrepreneurs to foster sustainable growth and outperformance in categories across food, beverage and consumer products. In addition to providing portfolio companies with capital, BFG provides teams with the advice needed to make critical decisions and maximize opportunities. This advice spans operational strategy, tactical marketing, channel development, organizational design and capital planning. BFG Partners is based in Boulder, CO and Los Angeles, CA. www.bfgpartners.com/

About Curlsmith

Curlsmith manufactures and supplies premium haircare products. It’s premium product lines include Moisture, Scalp Care, Strength and Hair Makeup recipes, each offering complete regimes from shampoos and conditioners to masks, styling products and hair supplements. While targeted at the textured and curly hair care market, the brand now makes products to benefit all hair types.

Launched in 2018, Curlsmith began as an online community, offering haircare content on YouTube and Instagram, providing a space for sharing tips, tricks, and tutorials for managing curls and waves. Fuelled by outreach from their growing following, the founders set out to co-create the next generation of curl care recipes, collaborating closely with their community, influencers and experts to develop everything from the recipes in the initial line-up to the brand name. Today, the brand is synonymous with clean, curly haircare globally.

How our services helped

Our due diligence work’s key focus was to gain comfort that the historic quality of earnings was robust and that the strong future projected growth was sustainable as the company planned to explore multiple new sales channels. Given the relatively short trading history and the rapid growth enjoyed to date, our approach meant we could provide support and guidance where necessary. We worked collaboratively with Curlsmith’s management team to obtain sufficient information to satisfy our client and make suitable suggestions to support the future sustainability of Curlsmith.

One of the key areas of focus was understanding the impact of COVID-19 on the sales figures compared to previously projected sales and the effect this had on the margins obtained from both retail and direct end-user customers.

We were able to corroborate the assumptions underpinning the forecast projections, gain an in-depth understanding of the required steps to achieve the next milestone and deliver our key findings in a clear, concise, opinion based report.

We had regular calls with our client to keep them fully informed on a near real-time basis as items came to our attention. This meant that the project timelines could be co-ordinated alongside other advisers and lawyers to reach the desired outcome.

Commenting on the deal, Boulder Food Group (BFG Partners) said:

“We thoroughly enjoyed working with Price Bailey on this project. The due diligence report, which focussed on Quality of Earnings and Working Capital, was terrific, being insightful while giving a different perspective on a number of the key areas of focus. Thank you, Price Bailey, for your support and great service helping us to complete this investment.”

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Top tips for employers considering the Enterprise Management Incentive (EMI) scheme

Price Bailey

The Enterprise Management Incentive (EMI) scheme is a tax-beneficial options arrangement used for attracting and retaining key employees, while protecting owner-managers from over dilution. EMI is a popular option for business owners because of the generous tax reliefs available and the limited upfront cost to the business. Here we provide our top tips for employers considering EMI.

Rationale

Business owners and/or shareholders should have a clear personnel and commercial rationale for putting the scheme in place and to understand what the right mechanism is for achieving those aims. For example, an EMI scheme works best in circumstances when the value of the business is set to increase notably so option holders can see that there is or will be sufficient value available to them at some point in the future. If this isn’t the case, then the lack of perceived benefits and the tax reliefs may not prove effective and there may be another way to attract or incentivise them in a way that make more commercial sense for the business e.g., bonuses.

Eligibility

EMI is one of the more flexible incentive schemes but there are a number of criteria that must be understood and met in order for the company and its employees to be eligible to benefit. If a clear, commercial rationale for the scheme exists, then the next step is to ensure that the criteria are properly understood and that the company can meet them. Generally speaking, EMI is available to most businesses except those that HMRC deems as ‘excluded trades’ and those exceeding the size requirement i.e., businesses with more than 250 employees. Some capital and ownership structures e.g., venture-backed businesses and joint ventures, require closer consideration to ensure they don’t impact on your ability to qualify. If you are unsure of whether your business meets the criteria, consider speaking with your tax advisor or contact us.

Time and seeking advice

Planning, designing and implementing an EMI scheme can take considerable time, particularly if clearance is being sought with HMRC to ensure the company will qualify. Therefore, allowing for sufficient time to agree the beneficiaries, terms, valuation, pricing and granting of options is vital. Having quality tax and corporate finance advisors can be extremely valuable in both saving management’s time and ensuring that the scheme is designed appropriately and in-keeping with the business’ wider growth strategy. It can also be useful to involve an employment lawyer in the design of an EMI scheme, particularly when implementing them for key members of the team, as they can ensure that the scheme does not interfere with any other parts of their employment contract and/or director’s service agreement (if applicable).

Valuation

In order to appropriately price the share options, a valuation will need to be conducted, calculating both the Unrestricted Market Value (the capital gains tax value at the time of grant ignoring restrictions) and the Actual Market Value (the capital gains tax value at the time of grant taking account of restrictions) of the share options to be granted. Share valuations have to be agreed with HMRC in advance of EMI options being granted, this can typically take between 2-4 weeks. Again, the timing of the valuation is important because once agreed with HMRC, they will usually set a 90-day granting period, during which the agreed valuation remains valid.

An EMI scheme can be an extremely valuable mechanism for employers to use in order to incentivise their employees, giving them a stake in the growth upside and access to very generous tax reliefs, without management over compromising on dilution. Its popularity is understandable yet the detail for each situation still needs to be understood and appropriately planned for.

The EMI scheme is currently under review by the Chancellor, following a ‘call for evidence’ in the March 2021 budget which will take place over the next few months. The deadline for responses is 26 May 2021 and is to consider whether the scheme should be expanded to include more companies. Therefore, we do not expect that the scheme will change in any way that would have a detrimental impact on those currently qualifying.

If you are in the process of designing the right package to attract a key member(s) of your team or considering the best way to incentivise your existing employees but you are not sure what the best option is for you, your business and your team. Please contact our Strategic Corporate Finance team on the form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

Employee Ownership Trusts | How to navigate the HMRC tax clearance process

Price Bailey

There has been a recent surge in demand for business owners wanting to sell their companies to their own staff through tax-efficient Employee Ownership Trusts (EOT). In this article, we provide a recap of the benefits of EOTs, the conditions that must be met and considerations for funding an EOT, before explaining both the importance of and the things business owners need to consider when applying for HMRC clearance for their EOT.

Benefits of an EOT

Firstly, a recap of EOT benefits and conditions. EOTs have strong tax benefits to offer:

  1. Capital Gains Tax (CGT) – the most substantial tax benefit of an EOT is a complete exemption from CGT for the owner selling shares to the EOT. To put that into perspective, at today’s tax rates (February 2021) if the owner sold the business to a third party then the owner would be charged 10% on the first million of capital gain and 20% on anything above that. Thus, with an EOT, the shareholder could be saving up to 20% capital gains tax.
  2. Income-tax-free bonuses – where the EOT is in place, employees can be paid up to £3,600 income-tax-free bonuses per annum (National Insurance would still apply).

However, as with any tax relief, the EOT rules set out specific conditions that must be met for the tax benefits covered above to be available. Here are some of the main conditions:

  1. Shareholders must sell at least 50.1% of the company’s issued share capital to the EOT – that is, the controlling interest must be transferred to the EOT. They must be ordinary shares, i.e., they have to have rights to dividends which are not at a fixed rate and assets on a winding up in proportion to the shareholding transferred to the EOT. The EOT must also hold the majority of the voting rights.
  2. The business must be a trading company – i.e., it must carry on a trade that is not investment activity. Thus, it applies to a variety of companies, including professional service companies. In fact, quite a few professional firms such as lawyers, accountants, architects find an EOT a suitable option for employee engagement. Although, please note it has to be a limited company, not a partnership.
  3. Beneficiaries of the EOT needs to include all employees and ensure equal treatment. The income tax-free £3,600 bonus has to be distributed on an equal basis. Some conditions are allowed if, for example, an employee works on a part-time bases or hasn’t been with the company for a specific period of time.
  4. A shareholder with >5% cannot be a beneficiary of the EOT. Anyone who in the last 12 months, or is connected to the person, in the last 12 months had >5% would not be able to be a beneficiary.
  5. 2/5th rule – this states that an EOT cannot be set up where the shareholders/directors exceed 40% of the workforce. For example, if you have five staff of which two are also shareholders/directors that is fine, but if you have four staff of which two are shareholders/directors, and two are employees, that would be in breach of this condition. Only shareholders with more than 5% are counted for this purpose. This highlights that an EOT may not be suitable for very small companies.

Crucially, a condition that is often forgotten is the need to demonstrate a commercial motivation for the transaction that is of genuine benefit to both the company and its employees. This doesn’t sound like a tax matter, but this might be the most important tax question the company will need to answer.

Funding an EOT

Typically, an EOT transaction is similar to a leveraged Management Buy-Out (MBO) when financing it via debt. However, the majority of EOT transactions rely on vendor loans rather than third party commercial loans. That is not necessarily a bad thing, vendor loans tend to be more flexible and tax-deductible, but it needs to be structured in the right way, i.e., striking the right balance between repaying vendors in a timely manner and not unduly pressurising the business by trying to repay too quickly.

Three key elements to this are:

  1. Interest – Depending on the loan agreement, the interest rate can be set as low as 0% or as high as feasible. Several things need to be considered when determining loan size and interest levels such as cash available, required investments for future growth, financing of projects etc.
  2. Timeframe of repayments – The time required to pay debt tends to be more generous than with a commercial loan, and repayment can range from around 5 to 10 years. Setting a timeline should be well considered and will depend on the objectives of the stakeholders. This might mean higher interest after five years, in doing so, encouraging the EOT to refinance with corporate debt and speed up value realisation for the shareholders, or trigger a sunset clause to release the EOT from the liability, if the company is not able to pay the loan in 10 years.
  3. Tax – Finally, any contributions/expenses made to an EOT is tax-deductible.

Critical planning before tax clearance application

From a tax perspective, the EOT process of tax clearance is very important, but relatively straight forward once the structure and EOT objective is clear. In our experience, HMRC typically approves these in 4-6 weeks with clearance subject to the conditions being met.

The more complicated and lengthy process is the discussions with employees and the setup of an EOT structure, which needs to take place well in advance of HMRC clearance application.

Key things to agree on before the tax clearance application:

  • What is the commercial purpose of an EOT?
  • Who will be in charge of the company? Will EOT have 51% or 100% controlling interest?
  • Who will be managing the EOT?
  • What is the value of shares to be sold?
  • What is the market value of the company?
  • How will the share purchase be funded?
  • If the company is going to fund the trust to make the share purchase, then how many years will it take to repay?

When thinking about these questions, don’t forget:

  • An independent valuation report will help to establish the market value and avoid any tax complications on the sale of the shares for the shareholder.
  • A robust financial model – to have comfort that the business will be able to finance the purchase obligations entered into by the EOT.
  • The EOT structure is crucial to avoid any personal liabilities falling on the trustees of the EOT.

For a tax clearance, the most important question is what the primary motivation for an EOT is. This is something the owners of the company and the advisors need to be clear about. The lawyers and the accountants will be on hand to help with an independent valuation of the company, financial models, legal documentation and other supporting documentation. Still, the business owner needs to decide why they are doing this and how involved they would like to be in the business once the controlling interest is sold to an EOT. The driving reason for the EOT establishment will make or break an HMRC tax clearance application.

What is the anti-avoidance provision that clearance is sought for, and why is it so important for an EOT?

The anti-avoidance provision that applies here is called ‘transaction in securities’, and it potentially applies as the share sale by the shareholder(s) can be seen as “disguised distribution”. Thus, getting clearance for an EOT transaction is important to ensure the provision doesn’t apply.

Why is it important?

To avoid the argument over the profit and loss account reserves, which could otherwise have been paid as a dividend. For example, if a company with small retail shops has recently sold 9 out of 10 shops, and then with one remaining trading shop applied for clearance to sell shares to an EOT, it would probably not get clearance because the profit made on the sale of the shops could have been distributed as dividends rather than to finance an EOT with an objective to get 0% CGT. HMRC could see this as an example of tax avoidance that has no main benefit for the company or its employees.

The government encourages companies and their shareholders to consider setting up an EOT through the application of significant tax benefits. Still, with the risk of future CGT increase in rates, this will certainly attract speculative applications. That is why an advance clearance is recommended before setting up an EOT to ensure the success of the scheme and benefits of the tax reliefs.

This blog was written by Simon Blake, a partner in the Strategic Corporate Finance team at Price Bailey If you would like to talk to Simon about structuring a deal, or our tax advisors, then please contact us using the form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

You can view this original Price Bailey article here

Fraud on UK businesses continues to rise through the pandemic – how do you best protect yourself and your business?

Price Bailey

As the pandemic continues to play out and impacts the UK economy far more significantly than we ever expected, many fall on hard times; pushing some to commit a crime they would not typically have done.

This article covers some of the main risks to businesses and individuals and provides some of the key, easier to implement, preventative measures. For further information, the Action Fraud website is a library of support for businesses and individuals and allows you to report a fraud both as a victim and witness.

Unfortunately, the main reason for the increase in fraud on UK businesses is the large number of individuals who will use change and uncertain times to exploit people and organisations.

Fraud is more prevalent around key dates and holidays. Fraudsters are more likely to attack when they think the individual or business will be most open; busy bank holidays, busy seasonal periods or simply Friday afternoons when people try to leave the office. Currently, nothing is very normal, businesses are trading at reduced capacity, staff are on and off furlough, and many are completing different roles than they would have previously; all these factors open businesses up to fraud.

There are two main ways to categorise fraud types, authorised and unauthorised. Authorised is where the fraudster tricks the individual into authorising a release of funds into an account controlled by the fraudster. Unauthorised is where funds are taken from an individual or company without their permission and, often, their knowledge.

The first line of defence is knowledge; this article goes some way to explore the most common types of fraud that UK businesses are subjected to.

What are the most common types? And how can you protect yourself, your employees and your business?

Authorised fraud types

We can stop many of these types of fraud with training, process and consideration.

Invoice redirection fraud

This fraud is committed by a fraudster impersonating a company’s supplier, reporting to have amended their bank account details, and asking that all further payments are sent to a new fraudulent account. The account details are that of an account opened fraudulently, the business is often only made aware once the real supplier contacts them requesting payment.

The fraudulent request can be received in many forms; email, phone call or letter. The fraudster will often have done their research and found the named company is a genuine supplier, what they supply, and an individual’s name at the company. They will often make the request via email with a spoof email address or via letter on headed paper.

Prevention

  • Educate all staff; letters are often sent to staff not in the finance team, hoping that the letter is left on someone’s desk in the finance team to amend without question,
  • Have dual authorisation activated on online banking. That way when a payee’s details are amended, it requires a sign off from another member of staff who can question the validity,
  • Implement a process to always complete a call back to a known member of staff at the supplier, making sure not to use a number from the fraudulent email/ letter but one from a readily available source (internet) or preferably a known regular contact number,
  • Using technology to automate invoice receipt and processing can be an easy way to prevent this fraud. The systems flag inconsistencies in invoices received which can prevent payments from being made to new account details without prior authorisation,
  • The supplier needs to be confirmed as a genuine supplier for the scam to work, so keep invoices safe, out of sight and internet security up to date.

Bogus Boss/ Director/ CEO fraud

This fraud is a regular occurrence, which often preys on the more junior members of the team. There are two reasons fraudsters may use this type of fraud; firstly to get a member of staff to click on a link so that malware may be installed on their system, secondly to request payment be sent to a fraudulent account.

The fraud is committed by impersonating a director/ manager / authoritative figure within a firm; easily found on most websites. The fraudster emails a member of staff, most commonly requesting a payment be made to an account. The email is often sent in an urgent nature confirming the payment needs to be made quickly and for reasons such as; it is for a new client win, the boss is stuck somewhere, or there will be recompense for the individual’s colleagues if not made quickly. This urgency is designed to make people think quickly and not clearly.

The email will often come from a spoof email very much like the directors; these are easily guessed or again found on the website. The fraudster will have often intercepted emails from the director and will mimic the email wording and tone so as not to alert the individual.

Prevention

  • Educate all staff, not just the finance team. Emails are often received to random email addresses within the firm. Some will unwittingly forward the email to the finance department; if this comes from another director, it carries even further weight. It also covers instances where staff are covering sickness, mat/paternity leave and secondments,
  • Have two-stage authorisation set up on online banking so that another member of staff is required to authorise all payments before release,
  • Have policies and procedures; if the company has a stance that no payment request will be accepted via email or telephone, then when one is, they can politely decline and tell it is a fraudulent request,
  • Contact your bank as soon as you are made aware funds have been sent. The banks have a duty of care to work together to stop and recover funds for individuals that are subject to fraud.

Internal fraud

All businesses put trust into their staff to do the right thing by the company; if owners don’t, they restrict their opportunities and often get bogged down in tasks they could delegate.

Most individuals are not calculated fraudsters, but some are opportunistic. It is often easy to hide your fraudulent ways if you are the only person working, or with authority, in your department. Internal fraud, fraud committed by the company’s staff, can be the hardest to spot and the most devastating. It often leaves the feeling of betrayal for the businesses owner and the feeling of guilt for the remaining staff due to not spotting the issue. There are too many ways of committing fraud, but there are some key characteristics to watch out for.

Prevention

  • Educating all staff that it is not always the colleagues they would expect to commit fraud that do. They should keep an eye out for:
  • • Changes in their colleague’s behaviour; seeming quiet or secretive,
  • • A change in a colleague’s personal circumstances, which may cause them to require cash or feel desperate,
  • • Changes in their colleague’s buying patterns or them living a lifestyle you would deem to be outside of their means,
  • • Changes in their colleague’s pastimes, i.e. gambling, drinking or drugs.
  • Make sure that not only one person has access to sensitive data or access to monies, and that dual authentication as a minimum is implemented,
  • Make sure that both security and monitoring are in place. Employing a suitable IT consultancy can be a worthwhile investment,
  • Create a culture where staff can ask for support and guidance when they have life events that may require work support; this may be the difference between them reaching out and them stealing from you.
  • Also, create an environment where staff can speak up about their colleagues in an anonymous fashion.

Impersonation scams

Where a fraudster impersonates a professional body such as a bank, the police, IT security firm or a utility provider and dupes the employee into transferring cash, entering sensitive information or downloading malicious software.

This type of scam can be devastating for the individual involved. The fraudsters are often very good at what they do, will pick their timing impeccably, often meaning the company only realises once it is too late.

A common approach is the fraudsters call confirming that the companies systems are at risk of attack, and they need to move funds to a safe account. They will often call from a supposed known number and have done their research to know which organisation to call from (bank details and accountant details are usually easily found at companies house) and contact the correct employee to deal with the issue.

Prevention

  • Make sure that dual authorisation is set up for all outward payments, meaning another colleague will need to question the reason and sign off the payment,
  • Educate staff, often just taking some time to consider their situation, will make them think something doesn’t feel right. Making staff aware impersonation scams are a thing is the first step; the second step is to empower them to challenge if they feel something is not right. Empower your team to request the caller calls a director or hangs up and calls the company back on a number, and to an individual, they know.

Unauthorised fraud types

Malware

Malware, ‘malicious software,’ is the term given to any software designed to harm or exploit. Fraudsters will aim to gain access to your system via many different methods, but the two main ways are:

  • Phishing emails/ texts – emails with an embedded link or attachment that contains a virus.
  • Using an external drive, like a USB stick. These can be plugged in, and unknowingly to the member of staff, contain a virus. Fraudsters are innovative in their approach and have been known to drop USB sticks next to a director’s car; a supportive colleague picks it up on their way into work, plugs in the device to confirm it is the directors and infects the computer system. But it can be as simple as a member of staff plugging in their personal device that doesn’t have the same security level as your internal system.

Malware comes in many forms (see ransomware below), but it is always embedded in the system to cause harm or exploit. Malware can provide false screens, mirror websites and many other things. The fraudster may not act straight away, and some malware will lay dormant in the computer system for some time. Unwittingly the staff member continues about their standard processes while the fraudster can watch and read everything they do. This is particularly dangerous if the staff member has bank access and sole authorisation to amend payees or send payments.

Fraudsters can gather all the login information required to access online banking, create a new payee with their fraudulent account details and send themselves money. If the individual that has been compromised, only has the ability to amend payee details, then the fraudster may lay and wait for the day before the company’s monthly payment run, amend all the payee details to theirs and when the payments are made the business is unaware until their suppliers make contact requesting payment.

Prevention

  • Implement good quality IT security, and restrict the ability to download software to only those who need it,
  • Create a culture that asks staff to think twice before they take action and consider risk,
  • Educate and test staff; some organisations send test emails with links imbedded to educate staff on how easy it can be to open the business up to attack.

Ransomware

A type of malware particularly devastating for businesses. The ransomware is delivered into a system in any of the ways noted above; it then sets about freezing the system or locking the files/ data held on it. The company/ individual is then contacted requesting a ransom; usually, money, to release the system/ data. Ransomware, being a type of malware can spread through a company’s system and, with the reliance on technology to run most businesses these days, make many inoperable.

The fraudster can often take some time to make contact, so the business starts to feel the true impact. The sums requested as ransom can be significant as well as the loss of income throughout the process.

Prevention

  • Back up all files and data to a remote server so that systems can be wiped, cleaned and reloaded,
  • Insure against the risks; insurance companies will have negotiators that will deal with the fraudsters on your behalf, hoping to gain a better deal,
  • Make sure firewalls and procedures are robust, preventing the malware breach.

Summary

With all these types of frauds education, robust systems and processes and an open culture can reduce the risk. Educate staff to be vigilant and suspect all transactions until confirmed genuine. The police and banks are backing the Take 5 Campaign, suggesting that taking time to think before taking action can help you clarify your situation.

Fraudsters are very good at what they do. Prevention is the best method of protection, but quality insurance can be the difference between a company surviving an attack and continuing to trade after.

Care for individuals

Outside of the business community, it is important to consider the vulnerable when thinking about fraud. As technology and security continue to improve, fraudsters are turning to scams and deception to dupe people into handing over their cash. Educating family and friends is the easiest way to limit the impact.

Frauds to make more vulnerable family members aware of:

Investment Fraud

A fraudster calls pretending to be from an investment company, often with an investment too good to be true. The individual is tricked into sending monies, they think will be invested, to the fraudster. Often only when the investment is due to mature or the welcome pack the individual was expecting doesn’t arrive do they realise what has happened.

Online purchasing fraud

Often through an online auction or from an unknown seller or website, goods are purchased which never arrive. Always ensure purchases are made from reputable sources and paid for in a way which provides protection against such frauds.

Deception fraud

As above, the individual is called by someone pretending to be from a professional organisation, i.e. a bank or the police and suggests their money is at risk and they should move it immediately. The individual then transfers funds to the fraudsters account and is told to leave it there until they make contact again.

Romance/ friendship fraud

Individuals are befriended by fraudsters who build romantic relationships or friendships over an extended period. Once the bond is strong, they request cash support, this can be to live and get by, or it can be as extravagant as they are stuck in a foreign prison and require bail money, or are flying over to see them and need money for flights. These types of frauds are not uncommon and can be devastating for families that see life savings disappear.

This article was produced by Matt Hector, Business Development Manager at Price Bailey. To contact Matt about any of the points raised in this article, please get in touch using the form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

 You can view this original Price Bailey article here

How do we value a business in the Covid Era?

Price Bailey

We are continually asked to value businesses, something that you will find any advisor saying is always an art rather than a science. With that in mind though in current circumstances, we are being asked: how do we factor in the impact of COVID-19?

It would be glib to say that there is no real impact as a valuation should always be based on the net present value of future cash flows as, as is the case for many of our clients, they do not have a financial model of the next five or so years of future cash flows. Instead, we are more often looking at the recent past financial results as the proxy to establishing maintainable earnings and applying a profit multiple.

This leads to the next question, what is maintainable earnings?

The majority of businesses have fared very differently due to COVID than they would have done in the normal course of business.

  • Once they adjusted to social distancing requirements, supermarkets have seen demand increase and huge growth in online shopping. 
  • Zoom saw demand sky-rocket.
  • Kooth, a business focused on children’s mental health, has seen demand increase, unfortunately. 

Other businesses were shut in the first lockdown, but reopened in June 2020, having furloughed large numbers of staff. And then most of the leisure and non-essential retail has been largely closed or operating at a fraction of previous levels since March. Furlough income has paid for unproductive wages. In fact, we are already experiencing scenarios where businesses have made more profits because of furloughing temporarily, and many businesses have seen their overheads reduce dramatically. Therefore, calculating maintainable earnings means examining the business’s future trading plans and adjusting historical results to fit.

  • It means assessing whether previous sales and staffing levels are likely to recover, and if so, how quickly.  
  • It means stripping out furlough income, non-productive staff and missed sales months. For many, missed sales in 2020 are gone forever whereas for others, e.g., construction, the sales are just deferred.

Have Multiples been impacted?

There is some evidence that multiples have reduced by about 25%. However, it’s important to remember that this is only measurable on completed transactions. Indeed, that would primarily have been transactions completing in the first 6 months of the initial lockdown due to the lag in reporting accurate deal data. Of those early deals, many sellers will have succumbed to selling out at a last-minute discount, rather than risking deferring the deal indefinitely. Therefore, it is no surprise that the data would show such discounts.

The alternative is true when we look at the stock markets, which rebounded quickly from the huge initial impact in March 2020. Therefore, rather than focussing on comparable historical transactions, we must again take a more common-sense view based on long term trends.

Debt and working capital

Most transactions and therefore, most valuations are also impacted by a net debt/net cash calculation and consider the necessary working capital position. Whilst it is easy to say that debt is easy to calculate, this misses part of the point. We will see a shift for some businesses in the sustainability of debt, as we suspect the average business’s debt capacity will not be as great in 2021 as it was in 2019. For working capital, the impact of deferred VAT payments (which I would transfer to debt rather than consider in working capital), rent payments, and the impact of changes to supplier payment terms (as well as non-COVID issues such as changes due to Brexit) all mean it is not as simple as just taking the average actual working capital of the last twelve months as the basis on calculating the next twelve months average requirements!

So, valuing trading businesses in the COVID impacted world has certainly made valuers think back to fundamentals and makes the job that much more interesting, but not impossible.

 This article was written by Simon Blake, For any questions regarding this article, you can contact Simon on the form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

 You can view this original Price Bailey article here

Navigating the post-COVID ‘perfect storm’ 2 March 2021

Price Bailey

It may not surprise you that there is a general expectation amongst insolvency practitioners (and beyond) that a significant rise in corporate financial distress and, therefore, formal insolvencies are on the horizon. Many commentators, though, have used the phrase ‘perfect storm’ to describe the potential severity of the situation we may all be facing. Current historically low failure rates may mask the growing number of factors that could converge to make 2021 the toughest trading year in living memory. Why might there be such choppy waters ahead?

The (more obvious) factors include:

The end of government support

The raft of measures, including CBILS & BBLS, the furlough scheme and VAT deferrals, clearly cannot go on forever and will need to be repaid. Sectors such as hospitality and leisure have suffered significantly and, without wishing to state the obvious, the damage will take a toll on many. Within the insolvency profession, there has been much talk about ‘kicking the can down the road’ each time support is extended. While the availability of support is to be commended, there is a growing sense of saving up problems for another day.

Catch-up

Official figures show that UK insolvencies in 2020 were at their lowest since 1989 and 40% down on 2019. Clearly, this isn’t because more businesses are thriving than in the previous 30 or so years. Rather, it suggests some of the measures introduced to help otherwise good and profitable business have also served to artificially prop up those businesses that were already doomed and would have failed. Measures such as the prohibition on winding up petitions, unless the reason for non-payment was non-COVID related (good luck proving that!), have held the number of business failures artificially low for the last 12 months. It cannot be the case that the injection of ‘COVID cash’ and creditor forbearance have turned these otherwise failing businesses into profitable entities. Aside from the unlucky casualties of the pandemic, a spike in insolvencies just to return us to where we would have otherwise been should be expected.

Other important factors:

The return of Crown Preference

For those old enough to have been in business before 2002, you might remember that HMRC used to be able to claim ‘preferential status’ (i.e. would be repaid before other unsecured creditors) in formal insolvencies.

From December 2020, HMRC became a (second-ranking, behind former employees) preferential creditor again regarding some taxes, most notably VAT, PAYE and National Insurance. This places the Crown back ahead of banks and funders with floating charges, making those lenders more vulnerable when a company enters an insolvency process. Read more on the return of Crown preference here.  

The Enterprise Act introduced the concept of the ‘prescribed part’ – where some of the cash otherwise due to a floating charge holder was instead paid to unsecured creditors. The ‘quid pro quo’ for this change was that HMRC’s preferential status would stop, and they would be repaid the same proportion as other unsecured creditors, such as trade suppliers. The new Crown Preference provisions come with no such counterbalance to ensure the banks are no worse off in an insolvency situation.

The proposed reintroduction of HMRC preferential status attracted much criticism when announced (even in the good old pre-pandemic days). I was one of many that suggested that the likely damage to the UK’s rescue culture would far outweigh any potential benefits to the Treasury. With all the government assistance afforded to businesses in the last few months, it seems incredible that HMRC’s proposed bump up the pecking order was not postponed at least.

For example, preferential creditors cannot be bound by a Company Voluntary Arrangement (CVA) without their consent. As such, unless the company hoping to enter a CVA to trade its way out of difficulties is confident of repaying crown debts in full, HMRC now effectively hold a veto on the entire process. Moreover, even if HMRC can be repaid, it is very common in the current climate for businesses to have large tax arrears from taking advantage of the option to defer VAT and PAYE payments. The need to find these amounts in full, ahead of all unsecured creditors, is likely to make many proposals simply unworkable, meaning that ‘terminal’ rather than ‘rescue’ proceedings may be the only possible option.

The banks

Barclays recently reported a 30% fall in pre-tax profits for 2020 and has set aside £4.8 billion for loan defaults due to the economic fallout of the pandemic.

A change in accountancy regulations brought about by IFRS 9 (stay with me!) means that the way the banks recognise these losses will change. Previously they would have only been recognised once the loss incurred. The movement to an ‘expected’ loss model, meaning that these lenders must fully recognise anticipated credit losses in the financial year relating to any loan default. Simply put, the banks’ balance sheets will take a bigger hit all the sooner.

The implication of this and the reintroduction of HMRC’s preferential status is that would-be lenders are likely to become less willing to advance new cash. Unless a company has significant assets, access to finance – especially in a rescue context – is expected to become more difficult.

Lenders might also seek tighter covenants around HMRC payments and greater control of book debts to maintain a fixed charge claim over such debts. In some instances, this might limit directors’ ability to manage immediate cash flow difficulties, removing an often important lever to defer HMRC payments in the short-term.

Pre-pack bashing

They don’t have the best of reputations, driven in no small part by media misreporting, but pre-packaged administration sales (where a buyer is found before a company entering administration and the business and assets are sold with little or no notice to creditors) are an important part of the UK rescue culture.

Numerous government attempts to ‘clean up’ the use of this procedure and improve ‘stakeholder confidence’ have been introduced, the latest of which seeks to make it mandatory for management looking to buy-back a business to employ an independent (but unlicensed) Evaluator. Whilst it can never be a bad thing to increase scrutiny and transparency of such a process, I have little doubt that the criticism of pre-packs has been somewhat overstated. Any IP entering into a pre-pack already has a staggering amount of hoops to jump through to agree and justify the outcome to creditors. The introduction of another barrier seems unlikely to provide any party with any real comfort but will further increase the costs of the process.

Crisis or opportunity?

I don’t wish to paint an unnecessarily pessimistic picture here. It is a common misconception that all insolvencies are bad (and far be it from me to suggest to anyone losing their business or their job to ‘cheer up & look on the bright side’). On an individual level, it is a tough and emotionally draining process for business owners to wind up a company’s affairs after many years and one I never take lightly.

On a more macro-economic level, however, insolvencies serve a vital function for the economy. At best, rescuing viable businesses and preserving jobs is often misunderstood and undervalued (I would say that, I suppose). Even at the lower end of the scale, terminal liquidation procedures, where a business often cannot be saved, serve to recycle assets into the economy and provide opportunities and new growth.

New legislation under the Corporate Insolvency and Governance Act 2020 or ‘CIGA’ (more on that another day perhaps!) has sought to improve the rescue landscape within the UK. My concern, however, is that many factors are potentially conspiring to make the use of tried and tested rescue procedures such as Administrations and CVAs less viable.

Focussing on the positive, the seemingly inevitable rise in insolvency rates affords those well-run, agile businesses with cash reserves and/or quick access to finance many new opportunities for acquisition and growth in the coming months and years. If you look hard enough and plan your journey carefully, perhaps there are some calmer waters to be found and some sunlight poking through the storm clouds ahead.

This article was written by Stuart Morton, Insolvency and Recovery Director at Price Bailey. If there is anything in this article that you would like to discuss or find out more about, please contact Stuart on the form below.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

You can view this original Price Bailey article here

Why pay an advisor for an investor list?

Price Bailey

Please note that, as of March 2021, this article is only applicable to early-stage founders (<£500k revenue and pre-profit) seeking equity investment.

Why pay an advisor for an investor list?

It seems like a strange question.

Surely finding names of investors is as simple as Googling ‘Series A investors’ or looking at websites providing lists of investment funds and angel networks?

We think not.

We have around 100 pre-profit businesses ask us to help advise them on growth and then raise equity funding each year. We only work with around 3 to 5 that fit our very specific criteria to raise funds. The other 97 or so, we help as far as we can and often assist with strategy, forecasting, valuations and market research, but do not work with them to place funding. The question is, what happens to the rest? Do they ever find investors?

At Price Bailey, we have relationships with a lot of investors, hundreds of angels and probably a hundred or so investment managers and directors at various venture capital funds. Investors have very specific criteria, and, sadly, most businesses asking them for funding either do not fully understand this or do not appreciate the importance. It can be heart-breaking for everyone to see a founder with emotional fatigue endlessly sending out pitch decks, occasionally getting to chat to an angel who may invest a small sum, but really hoping that Sequoia, Accel or Index call back. Yes, the US has a better market for early-stage funding, but unfortunately, no, it is not likely a UK business without any current US activity will raise US VC investment (though our experience suggests corporate investment from the US is very possible at an early-ish stage).

Whilst, for most funds, the money is there, and investors want to invest it, what we tend to find is that the lack of interest comes from companies not fully understanding the funds they are approaching.

Funds have rules and criteria. They also have target returns to meet, which vary considerably. They can be closed or evergreen. They can have rules to comply with regarding tax-advantaged monies. They have typically ‘sold’ an investment thesis to their investors and need a founder’s pitch deck to clearly and realistically show how they fit in. While many funds are increasing their focus on sustainability, diversity, and social causes, they still have to make money for their investors and money for themselves (how they do this is really important).

Despite founders being told they don’t need to care about this stuff, how a fund is structured, how they finance the day-to-day, if they have any money (funds run out of cash frequently) and how they produce returns to their investors are, therefore, critical pieces of information.

Added into that is the answers to questions around how a fund does a deal, for example:

  • What stage do they invest?
  • What are some live examples of recent cheque sizes and valuations?
  • Have preference shares been used?
  • Was EIS money mixed with VCT money?
  • What types of businesses did they invest in?
  • How experienced were the Boards?
  • What traction does the typical investee company have?
  • Do they co-invest at an early stage, and if so, with who?
  • Do their early-stage investments all already have angel and/or grant funding?

We believe it is critical for founders to understand this type of information about the investors they are reaching out to.

Knowing this stuff enables a founder to make an informed choice about who to go to, why and what to expect. They can profile investors properly, with more accurate data than Google can provide alone, and with commentary and analysis that helps unearth possible angles that show why investing in their business makes sense for that specific fund. The outcome is higher probabilities of success, a more informed approach and a shorter, smarter list of realistic investors.

In other words, knowledge is vital.

This is particularly important because in our experience (and we ask a lot of investors this question directly), once they have rejected an early-stage equity funding opportunity, they very rarely say yes later; even if they say ‘no’ by saying “you’re too early for us”, that is still normally a hard no. This means that if you go to the right fund at the wrong time, or worse with the wrong plan, the odds of you getting a “yes” later are very low in our experience. We would suggest to founders who get told this line (“you’re too early for us”) to ask the investor if they have ever bought into a business that has been told that later on. There will be exceptions, we’re sure (please also tell us as we would love to know!).

Relationships do help, and we rely on many of ours, particularly for transactions involving more established and more complex businesses. However, particularly for equity cheques under £1m, investors prefer to deal directly with founders than go via pure success fee driven brokers. Unfortunately, time has proven they can’t be trusted. What matters most is the relationship and trust between the future shareholder and founder team. That’s the critical part. Brokers on a success fee can muddy this and do not help build trust – they have been known to exaggerate, they do not advise on diligence, terms and legals effectively, and when the investment sums are small, a 5% or 6% share is quite a lot. Advisors like accountants, lawyers and corporate financiers do help build trust, but they are expensive, and the economics seldom work at an early stage because they will want to be paid to say “you should walk away”. Therefore we think that, for early-stage equity funding, founders should be building relationships directly with investors, not through a broker on commission.

Most importantly, if the right group of investors all say “no” and provide feedback on why then a founder has clarity. There are only 5 outcomes. Their concept has to:

  1. Look for corporate investment.
  2. Wait for new angels or newly formed funds to come along.
  3. Bootstrap and grow organically, ideally funded by customer revenue, or if not with founder/family and friends funding and reduced costs.
  4. Sadly come to an end.

This is a tough pill to swallow, but the certainty of the outcome provides many founders (and their closest loved ones!) with much reassurance.

So, coming back to the question, why pay for an investor list?

We don’t really mean ‘just a list. We mean a short report that gives founders exactly what they need. This includes: 

  1. Listing the most relevant investors (angels and funds).
  2. Providing the rationale as to why they are relevant based on deals completed, interests, history and criteria. This way, you are focussed on the most meaningful, relevant and likely investors, not a long list for whom you’re not going to be relevant.
  3. Giving real case studies (not the ones investors show online!) with real data to show what really happened.
  4. Giving real deal data and insight into terms, investment sums, dilution – this means diving into transaction data and the Articles of Association. This way, you can know what to expect if a deal happens.
  5. Details into how the funds are structured, what they may be trying to achieve and what that means for investee companies.
  6. And of course, where publically available, contact details.

Combined, we think this gives the founder a shortlist of the most relevant investors and arms them with exactly what they need to know to present themselves in the best possible way.

We think this is a powerful tool because:

  • Googling only surfaces a tiny proportion of the overall number of funds and is not a reliable tool for finding an exhaustive list of relevant investors. Advisors have knowledge, experience and expensive tools that do this.
  • Google will not tell you why a fund invested in one early-stage company but not yours.
  • Deal data on cheque sizes, dilution, stage of investment and the size of companies that have taken investment is hard to access without some of the tools and databases that advisors have.
  • Understanding the fund structure and criteria is key knowledge to have at your disposal. What a fund shows online and what comes out of deal data can be very different – what matters most is the recent deal data.
  • Case studies on deals for similar businesses at similar stages are incredibly helpful in assisting founders in describing why they are a great match for certain funds.
  • Early-stage investors typically want to hear from founders directly.
  • If the right investors all say “no”, you have 5 clear choices.

We think empowering founders with all of the above is the right way to raise early-stage equity funding successfully. It is our way of trying to help those that, during the earlier stages of their growth, it is not financially viable that we support and gives passionate founders the chance to still find equity investors who can help unlock their business dreams.

We do charge for this service as a fixed fee.

If you do find an interested investor from those that we have identified for you, all that we ask is that we, as advisors, receive first refusal in negotiating the deal between you and the investors. You will not be committed to working with us on this, but we would like the opportunity to continue building the relationship together.

We always recommend that you seek advice from a suitably qualified adviser before taking any action. The information in this article only serves as a guide, and no responsibility for loss occasioned by any person acting or refraining from action as a result of this material can be accepted by the authors or the firm.

 You can view this original Price Bailey content here

How to create the right mood

NatWest Business Builder: The Importance of Mindset

 © Getty Images
© Getty Images

Businesses are at their most productive when employee engagement levels are high. We’ve tracked down three experts to share their advice on improving relations.

Engaging employees and ensuring they’re emotionally invested in their job is a careful balancing act between getting the best out of them and creating a working environment where they feel valued and are rewarded.

According to a survey of more than 4,600 workers by Qualtrics Pulse, the UK lags behind the rest of the world when it comes to employee engagement. Only 48% of workers considered themselves engaged and just over a third (39%) said they looked forward to going to work most or some of the time.

The survey also revealed that 17% were looking to leave their jobs in the next two years. The reasons cited include stress due to workload and not feeling supported or being acknowledged by their employer.

Instil confidence

One of the reasons the respondents to the survey gave for looking forward to work is having confidence in the senior leadership team. Instilling this confidence comes from creating a leadership culture that emphasises continuous communication, learning and feedback, says Guv Jassal, a director at Frank Recruitment Group.

“Rather than wait for the yearly appraisal, build feedback and coaching into your daily interactions,” says Jassal. “This can help employees learn skills faster and feel engaged and committed to their goals. It’ll also reduce confusion around expectations and current performance, preventing any possible misunderstandings that could create a negative working environment.”

Frank Recruitment Group’s own philosophy of having an open-door approach to providing feedback has led to 82% of the team feeling that their line manager provides them with the relevant feedback they need to learn from.

Identify the talent

When it comes to younger workers, the Qualtrics Pulse survey found that they would most likely stick around if they had the opportunity to progress at a company.

Jassal says that it’s important not to reserve coaching for senior employees. If people are new to the company or have changed roles, then they might need a bit more guidance, but once they’re settled in you should assess their strong points. “You should be ready to identify emerging leaders and those who have the potential to be future managers. This way, you’ll not only engage your employees but increase the chances of retaining your top talent as well,” he adds.

By nurturing the talent in your business, you can better position your company to scale and grow. Promoting a more motivating and energised working environment, in which the leadership team maximises employees’ potential, will also help to attract and recruit more talent in the future, says Jassal.

Improve performance

While you want the best for your business, it’s important to remember that employees are going to make mistakes, regardless of how much coaching they receive, says Stephen Walker, co-founder of Motivation Matters, a consultancy helping small businesses to improve productivity, employee engagement and profitability.

“While you should definitely praise when appropriate, and loudly, you should also be quietly discussing failure to make things better next time,” says Walker. “Perhaps give them a word of advice, but certainly don’t micro-manage them.”

“Build feedback and coaching into your daily interactions. This can help employees learn skills faster and feel engaged and committed to their goals”

Guv Jassal, director, Frank Recruitment Group

Focusing too much on errors made could crush confidence and lead to lower morale and engagement levels. However, as a business owner, it’s also your responsibility to design processes and systems so that employees can learn from their mistakes and to minimise the risk of the mistakes being made again and again.

“There is always room for improvement. When positively presented, it can help employees to grow both professionally and personally,” says Jassal.

Motivating factors

In order to truly understand not just how engaged employees are but also how they are engaged, it’s vital that you monitor their motivation. “This could be done through a number of initiatives, such as surveys – the results of which could then be discussed by the senior management team and steps then taken to improve engagement,” says Keith Bevan, a director at Suresite, a Preston-based risk management firm that can provide small businesses with a range of training.

Valuing the opinions of your staff is a no-brainer. “They’re the people doing the processes, so why wouldn’t you empower them to improve the processes?” asks Walker.

Open to suggestion

The workers questioned for the Qualtrics Pulse research said that one condition that would greatly influence whether they decided to stay at a firm was whether their employer was good at striking the right work-life balance.

According to Walker, you shouldn’t be over-rigid or stringent when it comes to areas such as managing holidays. “If it’s not going to impact on the business or costs negatively, then you should be flexible and allocate employees the holidays they want,” he says.

Bevan agrees: “You need to care about your employees as individuals and acknowledge that there’s life outside of work.”

Be transparent

Ultimately, you should be showing respect to your staff. If employees feel like they’re not being respected then they’re likely to put less effort into their work and be less engaged.

While employees do have to earn respect to some degree, you can help the cause by being transparent, says Bevan. This means being open about the company’s performance, including turnover, and honest about any potential business challenges, such as future recruitment plans, which might affect employee workload or position within the company.

Further Reading

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Matching People to Jobs

Professor Colin Lindsay, University of Strathclyde and the PrOPEL Hub

There has been much discussion of the need, and opportunity, to build back better following the Covid-19 crisis. While much of the focus has rightly been on responding to the coming unemployment crisis, there is also a sense that we need to grasp the opportunity to create a ‘new normal’ that addresses some of the long-standing inequalities in the UK labour market.

One recurring problem has been that of under-employment – where workers want and need more paid hours but are not able to secure them. In late 2020, it was estimated that more than 3.5 million UK workers were under-employed (approximately 8.7% of the labour force).

The consistently high numbers of people under-employed is a problem that needs a fix as we re-boot the UK economy post-Covid-19. A recent analysis of EU and US data by David Bell and David Blanchflower suggests that under-employment contributes to limited pay and career progression for some workers. This adds to a growing evidence base that under-employment can impact negatively on employees’ wellbeing; contributes to in-work poverty; and limits opportunities for learning and progression. These negative impacts on employees contribute to socio-economic inequalities and may undermine the performance and productivity of organisations, sectors and regions. So, understanding the drivers of under-employment is important. 

The Universities of Strathclyde and Portsmouth, funding by the ESRC Productivity Insights Network, have been researching the distinctive drivers and impacts of under-employment in different areas of UK, and how the workplace practices adopted by employers either contribute to or help to alleviate the problem. Head over to https://www.propelhub.org/matching-people-hours-and-jobs-building-back-without-under-employment/ for more on the research and to watch the research team discuss findings at a recent webinar.

Halt! Who goes there?

Brian Bush Online Imposter Syndrome

Impostor syndrome (also known as impostor phenomenon, impostorism, fraud syndrome or the impostor experience) is a psychological pattern in which an individual doubts their accomplishments or talents and has a persistent internalized fear of being exposed as a “fraud”.

Weirdly while many people struggle with imposter syndrome, many people discuss it and there is lots of content around detailing the issue the ‘owner‘ often feels very alone in their feelings. Those feelings may include the idea that you don’t belong, that you are a fraud and this will be discovered and you will be ruined and shamed, that you don’t deserve your job, friends, business or any success.

First identified by psychologists Pauline Rose Chance and Suzanne Imes in the late 70’s much research and new knowledge has developed since. Initially thought to affect women only opinion among the psychology field soon balanced out the issue across the sexes and also attached the effect to all sorts of people .

I know in my own experience I have had these feelings occasionally and they have also at times held me back from doing things. Challenged my own beliefs in myself and had me feel like a fraud for no fraudulent behaviour at all. Like seeing a police officer and worrying you have done something when you know full well that you haven’t.

I also know people who are exceptional at what they do and struggle with this and according to the International Journal of Behavioral Science an estimated 70% of people experience these feelings at some stage of their lives.

So what do we do? Live with it, ignore it or cure ourselves. Of course there are different strokes for different folks and ultimately we control the onset of the thoughts that trigger the emotions. We can therefore review the thoughts and question them as they arrive and then frame our thinking differently to oppose the negative pattern. We can learn to think like non-imposters says expert Valerie Young

In my coaching work I find that investigating the issue using evidence helps as you must support the negative pattern by proving it actually exists. So if someone is struggling with this aligned to feeling inferior as a team manager for instance what evidence supports their claim? Proper hard evidence and not just negative self assumption. Are they getting complaints or constantly underperforming and this is being picked up in assessments or by their manager? If no real evidence supports this then it can be discussed to identify that this is a self developed emotion triggered by self doubt and then dealt with relevantly to the individual.

People struggling can be encouraged to share their thoughts with others to reassure them that they are not alone and in fact the people they assume to be successful may be triggering those same thought patterns themselves.

So most importantly we will all have moments of doubt and this is perfectly normal and the aim is not to think that you should never have these moments but to equip yourself with the knowledge and techniques to balance yourself out again. Again to Young who states that you can still have an imposter moment, but not an imposter life.

You can view this article from Brian Bush, Business Growth Specialist here

Em Pure Lock Up.jpg

The top five ways a recruitment consultancy could benefit your business in 2021

A New Year offers a fresh start for many and is traditionally a time where many people seek a new job. However, following the challenges of 2020, there are now more job seekers than there are available jobs.

We recognise that engaging a recruitment agency is an investment. But with many jobs being inundated with applications, our expert consultants can support you and help with your recruitment strategies.

We are proud that many of our region’s richly diverse organisations continued to work closely with us throughout 2020. In many cases, this collaboration is a result of the business having identified a particular need for additional expertise, particularly with the current market challenges.

Because we regularly ask our clients for feedback on working with us, we get a great insight into what these needs are, what they were expecting us to deliver which they didn’t think they would be able to do in house, and the reasons why they trusted us as their agency of choice. We’ve used this feedback to compile the top five priorities clients were looking for.

Could we help you with your business and hiring needs in 2021?

QUALITY OF CANDIDATES

The number one priority was the quality of potential candidates. This isn’t surprising as the current recruitment market has made both finding and competing for high-calibre candidates tough. Our consultants are experts in their different disciplines and the local market and they have invested time in developing and maintaining a strong network of contacts. This dedicated focus connects us to the best people and enables us to source high-quality and ‘hard to find’ candidates. This is an area where we feel we can really add value and save our clients time and money in the long run. With four offices located across the Eastern region, our reach, networks and insights extend beyond this and we have a strong track-record of also attracting talent from outside the region. To support our ability to source candidates from our extensive referral network, we have also invested significantly in a wide range of candidate attraction technology. This has provided us with the best systems to find and engage with potential candidates who may not be actively job hunting. 

KNOWLEDGE OF CANDIDATES

Again, it doesn’t surprise us that this was second on the priority list. After all, what would be the point of working with a recruitment agency if you only get sent a load of CVs with no additional insight? We recognise that our clients have chosen to work with us because they want the benefit of our experience, knowledge and support. We are one of only a few recruitment agencies to use competency-based interviews in conjunction with expert biological interviewing to assess potential candidates before even providing a shortlist of people. We consider this best practice in helping us to make great matches. It enables us to see beyond the candidates who just talk the talk or look the part on paper. In addition, we have all the resources and expertise in place to provide further insight into candidates via psychometric profiling. Before we put people forward, we want to discover whether they have the right attributes, attitudes and values to be a great fit in the long term.

PROFESSIONALISM AND FRIENDLINESS OF CONSULTANTS

We put people first and our focus has always been on establishing long-term client and candidate relationships and making great matches. Joseph O’Sullivan, our senior manager in our Norwich office, summed it up when asked what was most important to him when working with clients and candidates. He said: ‘I’ve found that a focus on relationships, integrity and personalities are the key’. In his Q&A article he says how he has developed some great, long-standing relationships and how he loves being able to make a positive impact on people’s careers, their lives and their businesses. All our consultants aim to be both professional and approachable, allowing them the opportunity to become trusted advisors to our clients.

KNOWLEDGE OF LOCAL MARKET

A good recruitment consultant will have their finger on the pulse of the industry they specialise in, and the local recruitment market. Our specialist sector knowledge is another key reason why companies chose to work with us. For example, one piece of fantastic feedback our Director Caroline Batchelor received was: “Caroline is known in the area for knowing everyone there is to know in HR, so I trusted Caroline to find the right person for our HR Team.” As well as helping to find suitable candidates, our specialist knowledge can help our clients to understand how they can stand out and compete in attracting the best talent. We can advise on everything from the jobs being advertised by competitors, through to any shifting trends in salaries or benefits packages.

FULFILMENT OF ROLES WITHIN TIMESCALE

When our clients are faced with a need to fill a skills gap quickly, we pull out the stops to help them without cutting corners. Our specialist knowledge means we are in a better position to find suitable people quickly, for example, our consultants will have access to people who may not consciously be looking for a job. Plus, we can ensure the process runs as quickly and efficiently as possible by doing the leg work. We can also help with temporary or interim recruitment to fulfil any immediate needs. We have developed a network of highly experienced temps, freelancers and consultants, which we can place with organisations on a short-term basis to provide a temporary injection of skills, resources and specialist knowledge.

We are proud to say that our feedback also revealed that 97% of our clients rated us as good or excellent and would use us again. If you would like to find out more about how we could support you and your organisation in 2021, talk to your local Pure consultant.  

WRITTEN BY

Gill Buchanan

Gill is a founding Director of Pure and has worked in recruitment since 1988, including eight years of specialist recruitment experience within an international specialist recruitment company and five years working within financial services recruitment in Sydney, Australia. Gill’s approach is to provide clients and candidates with the highest quality of service. She has a consultative style which has led to her building long-term relationships with both clients and candidates.