AN INTRODUCTION TO JDC’s CORPORATE FINANCE SERVICES

An introduction to JDC’s corporate finance services

The cornerstone of JDC since its formation in 2004 has been the provision of a full suite of corporate finance services to SMEs located throughout the east of England. We provide specialist advice to owners and management teams at pivotal points in their company’s lifecycle.

Often strategy and longer-term planning can be neglected by business owners who are fully occupied by the demands of running a successful business. Over the years, we have proven time and again that our input can help shape and define strategies which accelerate growth and enhance capital value, whilst at all times ensuring the most tax efficient structures are in place.

As you will see within this brochure, the range of services we offer is comprehensive, which means that at whatever stage in the journey you find yourselves, we can add value and clarity to ensure all of your objectives are achieved.

This brochure is designed to provide an overview of the corporate finance services we offer. I trust you will find it useful and we hope to work with you in the future.

A few words from our Corporate Finance Director

I joined JDC in early 2014 to lead our corporate finance services. Prior to that I worked for one of the largest accountancy firms in the UK specialising in sale and purchase transactions, MBOs, refinancing and advising on private equity transactions. I have acted as a lead adviser on a significant number of transactions, predominately in East Anglia, across a range of sectors and with transactions size from £3m to £100m+.

From my experience in working for a large national firm, I identified the requirement for entrepreneurs and business owners to have an adviser who understood the challenges that SMEs face and can relate to their need for impartial and honest strategic advice from professionals who had been there time and time again.

Since its formation, the key differential between JDC and other firms has always been offering a senior led service. The corporate finance team here at JDC is the most experienced in the region, meaning we can evaluate and advise on the full range of options and alongside our advisory services can deliver a fully holistic service.

JDC’s unique offering and our ability to relate to and advise entrepreneurs is also evidenced by the implementation of our own long term succession plan which was successfully completed in 2018.

JON DODGE FCA CF - FOUNDER & MD DAVE HOWES FCA MBA CF - DIRECTOR

WHAT ARECORPORATE

FINANCESERVICES?

JDC Corporate Finance is a specialist firm of chartered accountants providing corporate finance and advisory services to owner managed businesses across the east of England. We have offices based in Norwich and Chelmsford.

Our principal point of difference to other more general accountancy practices, is that our corporate finance and advisory team are specialists in mergers & acquisitions - this is what we do, day in, day out.

Our core corporate finance service offerings, as illustrated in more detail over the following pages, are acquisitions, disposals, reorganisations, MBOs, private equity investment and specialist advisory and transaction tax related matters.

Our services and advice can be invaluable whether your company is at the beginning of a growth curve; reaching maturity and seeking to take the next step; requiring a realignment of shareholder objectives; or at the peak of its capital value when the timing may be right to realise this value in a tax efficient manner.

Specialist services available:

• Funding for Growth - we have experience of the full range of funding options, allowing the board to understand and appraise the nuances of debt and equity offers and deliver terms through our contacts, which SME owners may not achieve on their own.

• Acquisitions - defining detailed growth strategies, debating with the board the correct approach to adopt and then executing this on terms which minimise risk and maximise value. Importantly, we work with your team to define implementation plans, ensuring integration and appropriate reviews occur to make the acquisition a success.

• Disposals and Exit Strategies - the corporate finance team at JDC have led over 300 transactions. Our level of experience is unmatched in the region. Whatever your industry sector, it is likely that we will have a strong understanding of your market dynamics, valuation method and the profile of strategic acquirers, either trade parties in your market or those from synergistic sectors.

“At JDC we pride ourselves on working with companies over the long term – providing honest and straightforward advice, so owners and management teams are able to make informed decisions on what is the right strategy to pursue after receiving a full assessment of all of the options open to them.

Our clients bear testimony to how we operate, and importantly how we differ and distinguish ourselves from general accountancy firms or business brokers – we are proud of our reputation, and to be recognised as the leading independent corporate finance practice in the region.”

Dave Howes, Director of Corporate Finance

AN OVERVIEW OF OUR SERVICES

StrategicReviews

Refinancing

Private Equity

Acquisitions

MBOs / MBIs

Disposals

• provide an independent assessment of your business • highlight current company position • provide views on strategy, growth and funding • include consideration of future sale options • include reviews of the management team / structure • provide clear actions and recommendations.

• raise new debt to grow • new or existing lenders • competitive process • provide a variety of security, pricing, repayment options • supported by our recommendations on best option.

• cash out to de-risk shareholders • development/acquisition capital to accelerate growth • creation of business plan and financial model • internal rate of return (IRR) modelling • introduction to strategic investors • negotiate capital participation • integrated tax advice and clearances • management incentive schemes • 100 day plan and delivery support.

• understand drivers and areas for growth • identify and define targets • approach confidentially • negotiate and agree best terms • due diligence and identifying risk • integration and 100 day plans.

• assess appetite and gaps in team • review funding options both equity and debt • structure deal in most tax efficient manner • ensure sufficient headroom and ability to fund ongoing growth.

• valuation and expectations of shareholders • liaising with key employees • understanding and evaluating strategic buyers • pre-sale diligence • optimal timing of transaction • create and maximise competitive tension • lead every aspect of the strategy and delivering the deal.

“Our first experience of JDC was when we needed help to evaluate a potential acquisition opportunity at short notice.  JDC not only turned around a quality piece of work extremely quickly, they also offered great, balanced advice and proved to be both a valuable sounding board and a trustworthy partner.”

Phil Jones, Kanes Foods

Raising the bar

STRATEGIC REVIEW

We will independently challenge and review your business strategy.

Our team has a wealth of experience in quickly understanding and reviewing business performance and making recommendations to improve things.

Our strategic reviews are designed to add value, not to tell you what you already know, and we draw on our experience and knowledge to give you valuable insight and advice.

A typical strategic review includes a financial assessment (both historic and forecast), a summary of future funding needs, advice on ways to improve profitability, consideration of your growth strategy and comments on the management team and organisational structure.

We always tailor the scope of work specifically to your needs to focus on the areas that matter most to you (and in the right order) and we are often asked to give a view on the current and future value of the business as well.

Our strategic review documents are punchy and precise. We focus on what matters most and will provide a list of key actions and responsibilities for your senior management team to follow up and implement.

To ensure the review delivers best value these actions need to be completed so we always stay in regular contact to ensure progress is being made and provide further support.

Our top 5 tips

• A strategic review should be succinct and to the point;

• Recommendations should be clear with no ‘sitting on the fence’;

• An action plan with ownership and responsibilities passed to key members of management is vital;

• The review should deliver enhanced shareholder value within a year; and

• Regular post-review follow up to check on progress is a must.

FUNDRAISINGWe have extensive relationships with the major high street banks providing traditional funding routes, helping clients to secure funding through asset finance, invoice discounting, mortgages, overdrafts and cash flow loans.

There are also times when the traditional funding routes from high street banks are not available to businesses. We have strong relationships with many alternative finance providers which have different investment criteria and can therefore provide an alternative solution.

Where the size of the funding requirement means an injection of equity funds is needed (coupled with additional experience and resources) we can make the necessary introductions and lead the business through a private equity fundraising process.

We approach funders on behalf of the business and negotiate terms to drive the best deal. We project manage the due diligence requirements of the funder and work with lawyers to negotiate security documents to allow the team to focus on the day to day running of the business.

Our top 5 tips

• Make sure your plan is stress-tested - all lenders will expect this;

• Have a clear explanation for how the new money will be utilised and how it benefits the business;

• Make sure historic financial information is polished and up to date;

• Speak to a range of lenders - different lenders will have different appetites at different times; and

• Do not spend it all at once! Always maintain enough headroom for future needs.

Raising the bar

“We completed the sale of our company seven months after instructing JDC and would highly recommend their services to business owners who are looking for high quality, value for money advice that is delivered in a personable manner.”

Andrew Randall, R.A. Howarth (Engineering) Ltd

“JDC ensured that all of our objectives were met, delivering a high quality service and achieving a deal with a strategic purchaser that ticked all of the boxes.  To any business owner thinking of selling their company, I would highly recommend they contact JDC in the first instance!”

Paul King, Saxon Packaging

Raising the bar

PRIVATEEQUITY

Private equity is finance that is provided in return for an equity stake in a company which can also be supported by debt/loan notes. Investors generally take a medium to long term view, typically investing in companies for between three and ten years, which means a commitment to build a lasting and sustainable value within the business.

Private equity creates value by supporting high quality management teams with a credible business growth plan and then realise their investment through a strategic trade sale, second round of private equity funding or public listing.

Private equity investors typically aim for a return of 30% internal rate of return and a 2.5x to 3x money multiple on the initial investment. This is achieved by accelerating an organic growth plan (opening new offices, launching new products, international growth) or through acquiring complementary businesses with synergies to grow the overall group.

Private equity is not appropriate for all businesses, but scenarios where it can work very well include:

• Management buy out - supporting a management team in a transaction by providing the capital required to buy out all or part of a shareholding.

• Shareholder de-risking - existing shareholders can partially realise the current value of their shareholding through a partial stake and ‘roll over’ the remaining value into the business to participate in a future exit and upside.

• Founder shareholder exit - a business may not be able to raise sufficient funds through traditional methods. Private equity may provide an alternative opportunity to raise the required funding.

• Accelerated growth - providing a financial structure to assist the company to accelerate a growth plan organically or through a buy and build strategy.

• Market opportunities - providing development capital to enable the company to take advantage of market opportunities.

ACQUISITIONS: STRATEGY & FUNDINGBefore moving ahead with any planned acquisition, we spend a significant amount of time with the management team to define an acquisition strategy by independently and expertly reviewing the existing business structure and its strengths and weaknesses. This ensures the acquiring company is ‘transaction ready’ and that resources are focused on the potential targets that are going to add the greatest strategic shareholder value as part of a combined group.

The acquisition strategy will then form part of a wider business plan (including financial forecasts) that covers both organic and inorganic growth, defining the strategy and adding significant credibility if external funding is required from either debt or equity houses.

Debt finance can be sought via high street banks and traditional funding routes, which can provide clients with secure funding such as:

• Asset finance;• Invoice discounting;• Mortgages;• Overdrafts; and • Cash flow loans.

We also have close contacts with and can introduce many alternative finance providers (of which businesses are often unaware). These funders have different investment criteria and can therefore provide an alternative and often more creative solution. Our knowledge of these options and ability to debate the pros and cons of each, is a key differential of our offering.

Where the size of the acquisition target requires an injection of equity funds (coupled with additional experience and resources), a private equity fundraising process presents an alternative option for the business. This can be run alongside the acquisition.

We approach funders on behalf of the business and negotiate terms to drive the best deal, before project managing the due diligence requirements of the funder and working with lawyers to allow the team to focus on the day to day running of the business.

Raising the bar

“I found the advice and input from JDC to be invaluable. We would strongly recommend JDC to companies who are looking to unlock growth and achieve their full potential and look forward to continuing to work with JDC as our trusted advisers in the future.”

Gareth Miller, Cornwall Insight

“We would not have closed this deal without JDC’s advice, support and deal management skills.  From day one to the close of the transaction they were excellent.  The whole team are looking forward to continuing our long and successful relationship as we continue to grow our business.  Thank you JDC!”

George Morrison, Aquaterra Energy

Raising the bar

ACQUISITIONS:PROCESS &STRUCTUREIdentifying the right target is critical. We will help you identify the ‘best fit’ target businesses, whether within your existing sector (a competitor or similar business in a new geographical area) or an acquisition in a synergistic sector to yours which provides a natural overlap of client base, product lines or operational efficiencies.

Opening discussions with business owners regarding a sale, requires skill and experience. Once we have identified suitable targets with you, we will usually make the approaches on your behalf to preserve your confidentiality and to ensure your approach is viewed as serious and credible.

Most business owners will naturally say their company is not for sale when approached. Our goal is to talk to the owners of ideal strategic matches and establish a meaningful connection with them through sincere discussion, an understanding of the owner’s objectives, their possible motivations and their ideal timeline to open them up to the possibility of a transaction if all these objectives are met.

We will research relevant acquisition targets from across the globe using our sector knowledge and extensive research databases and analyse each company in more detail to ensure that it is financially and commercially sound and that the company is a good match against the defined acquisition strategy.

We attend and chair initial meetings with you, identify key acquisition issues at an early stage and discuss our findings and recommendations with you in a clear, concise and cost effective way. We will use our extensive experience to value the target and lead the structuring of the deal to put together a letter of intent (“LOI”) that carefully balances the risk for you as an acquirer, but is also attractive to the seller.

Until a business has been through an acquisition process it is hard to understand the effort and experience required to ensure not only that the acquisition process is successful but also that the management team stays focused on their existing business. We help achieve this objective.

MANAGEMENTBUY OUTS

If you are a business owner considering the implementation of a managed succession plan with a strong management team in place, or with an ambitious management team looking to take the business to the next level, a management buy out (MBO) could be the right strategic solution.

This can allow an owner to significantly de-risk and extract value from their business and at the same time retain as much or as little ongoing involvement in the business as they desire.

We recognise that most business owners and management teams are not aware that an MBO is feasible and are unaware of how much value can be extracted.

We provide highly experienced, professional support to advise on the most appropriate and deliverable structure. We spend a significant amount of time with all stakeholders in the business to understand their personal aspirations and their thoughts on the prospects for the business.

Our role starts by assessing the viability of a buy out alongside all the other strategic options available. This is based on an analysis of the current and future prospects of the business and our understanding of the availability of funding (both debt and equity) to support the buy out.

This allows us to structure an MBO that meets the needs of both the current owners and the management team. We will discuss our findings and recommendations with you in a clear, concise

and cost effective way. None of our clients like wasting time and money on non-starters and neither do we.

We will use our extensive experience to value the business and lead the structuring of the deal and prepare Heads of Terms that are both attractive to the current owners whilst also carefully balancing the risk and opportunity for the management team.

Where appropriate, we work closely with management teams to develop a detailed business plan, lead negotiations with funders and project manage due diligence so the team can concentrate on the day to day running of the business.

Raising the bar

“JDC have acted for the Pinnacle group since 2006, always providing impartial objective advice and building a huge level of trust over many years.  Their most recent involvement met all parties’ aspirations for timing, affordability, tax efficiency and above all else, a transparency which was invaluable in achieving the satisfactory outcome.”

David Meigh, Pinnacle Consulting Engineers

“We engaged JDC due to their successful track record in our sector and the immediate confidence we felt in their ability to secure a deal.  Dave Howes and his team guided us through every step of the transaction, providing advice and acting as an effective filter during due diligence, allowing us to run our business in parallel.”

David Fletcher, GEV Group

DISPOSALS:VALUATION

The value of a private company is typically calculated by establishing its Enterprise Value based upon a multiple of the sustainable EBITDA (earnings before interest, tax, depreciation and amortisation). The multiple is dependent on a range of factors.

The Enterprise Value is then adjusted for any excess cash or debt that has been identified from the debt free / cash free calculation (incorporating shareholder / director loans normalised working capital / debt structure) to arrive at the Equity Valuation of the shares.

We will independently and expertly review the business, highlighting the key areas that an acquirer may perceive as ‘risks’, which can in turn contribute to a decrease in perceived valuation, an

unfavourable deal structure or outright withdrawal from the transaction.

We will also advise on appropriate pre-sale actions and the optimal timing of any process to maximise value by identifying key financial and non-financial criteria and highlighting areas where the value of the business can be increased.

We provide realistic valuations based on our experience of selling over 300 SME companies in addition to our vast experience of providing valuations of well over 1,000 companies acting as independently appointed experts.

We evaluate the shareholders’ tax position to ensure the best structure of any deal and often work with owners to ensure maximum value is achieved.

A strategic premium can often be achieved for a company by a combination of:

• Positioning the business and timing of a sale;• Building the story and demonstrating a credible

strategic plan;• Running an exceptional sales process and

ensuring that competitive tension is built with a number of potential acquirers.

Our pre-sale due diligence work significantly reduces the likelihood of unexpected issues arising through an acquirer’s subsequent due diligence and therefore increases the ability to achieve a successful sale in a timely fashion. This incorporates all of the potential ‘red flag’ areas including operational, financial and legal.

Raising the bar

Raising the bar

DISPOSALS:PROCESS &TIMINGThe Information Memorandum (IM) is the document that is designed to not only get potential acquirers interested in your business, but also ensures that every value driver and potential synergy has been fully explored in order to increase perception of value. Understanding from the outset the information that acquirers will need and presenting this in a methodical fashion will maintain momentum and remove some of the pressures of the deal process.

A good quality IM will take some time to prepare, incorporating narrative on the history of the business, revenue streams, management structure and operations along with a business plan incorporating financial and growth forecasts. This all needs to be presented in a coherent and credible manner.

Through our experience, connections and research we will identify and agree with you the most appropriate acquirers for your business, both from within and outside your existing market.

We have a track record of unlocking private, listed and private equity backed acquirers, based either in the UK or internationally, as well as handling more commercially sensitive approaches to existing competitors.

As the IM will contain sensitive information, we will only circulate to potential acquirers that you have approved once non-disclosure or confidentiality agreements have been signed and we will tailor the IM accordingly.

We manage the process from first contact to completion, setting deadlines for acquirers to meet, ensuring momentum is maintained and a competitive process is instigated. Importantly, we then stay involved at every stage of the process, from drafting the Heads of Agreement to ensure that all necessary commercial aspects are covered, before project managing all parties involved in the due diligence process and providing commercial input into the legal documentation, drawing on our extensive experience of previous transactions in order to drive the deal to completion with a successful outcome.

Our track record of successful company sales and our testimonials from very satisfied clients both illustrate the value that we add.

“After the very successful sale of our business, we would like to thank all of the JDC team for their advice, guidance, hard work and dedication in completing this complex transaction; something we could not have achieved without them.”

Paul Stevenson, Reef One

OUR RANGE OF SPECIALIST SERVICES

Through our business growth services we provide external advice or hands-on interim management support to a wide range of clients. Our services include:

business plans • financial projections • refinancing • tailored MI • Non-Exec services • cash flow management • development strategy • turnaround.

Whether a first time purchaser, a serial acquirer or an MBO/MBI team, we have the knowledge and experience to assist in all aspects of the acquisition process including:

target searches • target appraisal • valuations • funding • due diligence • negotiation • deal structuring • integration strategy.

We specialise in advising on full, partial or structured exits, retirement sales, divestments and equity release. Our services include:

pre-sale advice and preparation • information memoranda • contacting targets • negotiating and structuring the deal • advising on post-deal issues • accelerated M&A.

The restructuring of a company or a group of companies involves financial, structural, strategic and tax based considerations. We are specialists in:

financial restructuring and refinancing • de-mergers • divestments • succession planning • capital extraction including company purchase of own shares.

We are very well connected to many private equity and venture capital funds and focus on matching the best placed investor to the right deal. We can help with:

pre-investment preparation • deliverable deal structures and IRR models • investor profiling • business plans and sensitised financial models • leading management presentations • negotiating the deal • project management • advising on post-deal issues.

Understanding the tax planning opportunities and avoiding tax traps and pitfalls is at the core of all our planning work. We are specialists in: _______

all aspects of transaction tax • corporate reconstruction • share option arrangements • investment and reinvestment relief • tax effective income extraction • tax effective capital extraction • inheritance tax planning • specialist tax clearances.

Business Growth Acquisitions Disposals Reorganisations Private Equity Specialist Tax

Talk directly to any of our senior team:

Jon Dodge FCA CF MEWI

m: 07775 696809e: jd@jdc-corpfin.co.uk Jon has over 25 years’ specialist corporate finance and advisory experience. Before forming JDC he was a corporate finance and tax partner in PKF.

Chris Adlam FCCA

m: 07786 166927e: ca@jdc-corpfin.co.uk Chris has over 20 years’ experience advising businesses through all stages of the corporate cycle. He joined JDC from PWC.

Dave Howes FCA MBA CFm: 07500 858143e: dh@jdc-corpfin.co.uk Dave is JDC’s Corporate Finance Director and has spent 10+ years advising clients across East Anglia. He joined JDC from Grant Thornton.

Tony Longman CTAm: 07342 887680e: tl@jdc-corpfin.co.uk Tony has over 25 years’ experience as a specialist tax adviser and has previously led teams at KPMG and Grant Thornton.

CONTACT US

Main Office

Dencora Court2 Meridian WayNorwichNR7 0TA

Essex Office

The Dutch BarnOld Park Farm, Ford EndChelmsfordCM3 1LN

Contact

T: 01603 703177E: info@jdc-corpfin.co.ukwww.jdccorporatefinance.co.uk

Raising the bar

Copyright © JDC Corporate Finance. All rights reserved. This publication or any portion thereof may not be reproduced or used in any manner whatsoever without express written permission of JDC Corporate Finance. JDC Corporate Finance is not authorised under the Financial Services and Markets Act 2000 but we are licensed by the Institute of Chartered Accountants in England and Wales and are able in certain circumstances to offer a limited range of investment services to clients. We can provide these investment services if they are an incidental part of the professional services we have been engaged to provide. The information provided in this publication is for general guidance only and expert advice should be obtained in relation to your specific circumstances.