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So far 19cf has created 4 blog entries.

Preparing for an IPO

Many entrepreneurs see an IPO (Initial Public Offering) where the company’s shares are floated on a stock market as a desirable stage in their company’s development.  There are several reasons for this as having a stock market listing gives a market determined valuation, an exit route (especially if funding has been raised from external investors) and a level of status.  Generally it leaves the current management team in control of the company.

Over the last two years I have been involved in helping two companies prepare for their IPOs.  A key feature of this is being able to demonstrate that the company has the processes in place to comply with its obligations as a listed company.  This has to be demonstrated to the sponsoring broker who will ask the reporting accountants to check the processes.

The best starting point is to compile a risk register detailing all the significant risks (that will be) faced by the listed business together with how they are mitigated by the controls that the company has in place.  In some cases the control environment will need to be enhanced to deal with the new environment that the company will be operating in.  A common area for enhancement will be the need for monthly management accounts, prepared on a consolidated basis (covering all the companies in the group) under international financial reporting standards (IFRS).

The key risks and how they are managed are documented in the Financial Position and Prospects Procedures Memorandum (FPPP).  This will develop into a significant document which will go through multiple iterations, before being approved by the board.  The reporting accountants will review the FPPP in detail and seek evidence that the controls mentioned are operating correctly.  One of the […]

By |January 4th, 2016|Business|0 Comments

Business Plans – where’s the value?

There is an emerging trend that business plans are no longer necessary. Indeed, there is something to be said in favour of this view in a fast moving world with disruptive business models.  To my mind, critics of the business plan overlook its advantages.

A business plan forces an entrepreneur (it should be them and not someone they employ) to write down what the business is going to do, how it is going to work, the consumer demand that it will satisfy, the evidence of market demand, the competitors, the market size, how it will make money, what resources it is going to require and the relationships that will need to be built.  These are not easy things to write down and require a lot of thought.  The writing of a business plan forces the entrepreneur to think.

Of course parts of it are likely be wrong, but that is not the point.  Once a business plan has been written it can easily be shared with others.  Their thoughts and perspectives can be gained and the business plan amended where appropriate.  It can then be shared again and inconsistencies and improvements identified.

Once the business plan is starting to take shape it can be used to create a series of financial projections.  Doing this will provoke further questions and the need to obtain further answers, which in turn may lead to the business plan being modified again.

It is this iterative process which gives the business plan its principal value.  By thinking through how the business will operate, how customers and competitors may respond, strategies can be developed which avoid making costly mistakes.  What is important is not to turn this into a burdensome exercise which loses its value.

The […]

By |January 16th, 2015|Business|0 Comments

Withdrawal of Quantitative Easing – What will be the impacts on companies?

By way of background, the Bank of England holds £375 billion of gilts. The US Federal Reserve has been buying $85 billion of US bonds each month giving a holding at the end of 2013 of some $3.7 trillion.   The Fed is now reducing its monthly purchases by $10 billion to  $75 billion of US bonds a month from January 2014 in a process known as “tapering”.  This is still significant monetary easing in the USA but it marks a turning point.  Over time we can expect the monetary easing to stop completely and eventually reverse through reductions in the gilt and bond holdings and increases in interest rates.

There are a number of consequential effects that can be expected, some of which are likely to impact your business:

Interest rates on government debt will rise as these have been driven down by QE. This may have an impact on company borrowing costs and if so, will reduce company profitability. At the start of the Financial Crisis interest rates fell rapidly, with UK bank base rates moving from 5% in late 2008 to 0.5% in early 2009.  There is a good chance that once rates start to rise the increases will come quickly.
Pension liabilities will fall as they are calculated by reference to long-term interest rates. The interesting question will be what happens to assets held by pension schemes. To the extent the investment is in government bonds, prices are likely to fall leading to lower asset values. Investments in equities could rise as the economy recovers but this will be offset by higher interest costs. The other factor affecting equity prices is the multiple of earnings on which they trade – this is the big uncertainty. […]

By |December 19th, 2013|Business|0 Comments

Diary of a UK Start Up #19

I have registered two domain names for my business, 19CorporateFinance.co.uk and 19CF.co.uk, using Go Daddy ( http://uk.godaddy.com ) as they are well established and had some attractively priced plans.  I chose the .co.uk suffix as I operate mainly locally in the UK.

The following article was the best I found giving a good overview of all the steps required: http://www.thesitewizard.com/gettingstarted/startwebsite.shtml

Having given some thought to my requirements, the various options and the gaps in my knowledge, I came to the conclusion that I had a choice to make.  I could either invest a fair amount of time getting to know a Content Management System (CMS) and develop the website myself or I could find someone with the necessary knowledge to do it for me.  Feeling that there was a high probability that I would make some mistakes and need to re-trace my steps, I chose to use the professionals.

Having looked at a few firms, I decided to use Footprint on the basis that they understood my brief, I liked some of their other designs and they would give me a website which I could then maintain myself, but with the ability to ask for support when required.  I have been very pleased with the support provided and the speed with which the website has been delivered.

Let me know what you think of the finished product www.19CorporateFinance.co.uk by using the contact us form on the site.

By |November 18th, 2013|Business|0 Comments

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