FTA: Do you tend to ask companies to fix certain elements in their business before agreeing to a purchase or do you filter companies based solely on what is there?
DL: We are typically making an assessment on what is there. However, we are building up a healthy pipeline of businesses where, for either side, the timing was not quite right for a sale or purchase.
This is not always that the business needs to 'fix' something, as it can be that they wish to grow a little more themselves, or some changes may benefit both them and a purchaser such as Kingswood.
FTA: What is your advice to businesses currently looking for a buyer? Are there any particular issues they should be bearing in mind or trying to fix?
DL: My primary advice would be to not leave it too late. It may take up to 12 months to conclude a sale and if you then add on two to three years of an earn-out period, sellers often say they wished they had thought about it a bit earlier.
Another piece of advice would be to engage with a purchaser before making any changes, as what may seem sensible may not be what the buyer is looking for or they may overlook.
Having a separate viewpoint on the strengths of your business can add to its sellable value.
Similarly, with successful businesses that are growing, sellers often are in two minds on the best time to sell. Kingswood is able to structure deals where future growth can be included in the consideration so this should not be a reason to pause if the timing is not quite right now to meet other objectives.
FTA: Will the consumer duty make target businesses higher quality?
DL: Yes, it will as, in fact, does the level of regulation in general that we see today. All initiatives to ensure client conduct is optimal have to lead to a higher quality of business. Certainly, at Kingswood we set the bar on our client outcomes very high and consumer duty simply formalises this.
FTA: What are the main difficulties in expanding abroad?
DL: Expanding into other countries requires a high level of capability in operating across different jurisdictions and regulatory regimes.
In addition, while it can be the case that companies can operate ostensibly as separate businesses across jurisdictions, the most optimal scenarios are where there are some synergies, be it technology, investment proposition or similar.
FTA: What do you make of the interest coming from private equity houses in the UK advice market?
DL: I am not at all surprised at the level of interest from both UK and international private equity houses as the sector has some very strong opportunities for consolidation.
