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MBO? M&A? Venture Capital? How to chose an adviser?

How do you decide whether to use an adviser to help with venture capital, M&A, finance raising, or strategy?  And if you do - how to choose one?  Here's  a six point guide.

  1. The Problem : Do you really have an issue to solve, or a corporate itch that need scratching?  Might it be better to get an outside opinion, in an owner managed business it can be lonely as CEO with no-one to talk to about the really crunchy ownership or strategic issues.  Alternatively is there an important task - maybe an acquisition - that you could do,  but lack the management bandwidth to cope with without hurting your main business?
  2. Your Agenda : Find an adviser who is genuinely keen to help you work out the nature of the problem, before diving in to solve it.  i.e. someone who wants to discover, help define, and work to your agenda.  There are plenty of "brush salesmen" in my trade, who have  a solution - brokers who only do company sales are a good example - and will try to sell you it come what may.   I have met many companies where the question was how to sell, but the answer was either (i) solve what's bugging me about my business and making me want out (ii) find a way to get me some cash out of the company tax efficiently, or (iii) find a way to amicably get one shareholder out of the business.
  3. Skills & experience: Does the advisory company have people with the right skills and experience?  What have they done before?  Don't be their first MBO! Talk to their clients.
  4. Availability : Will they be there when and where you need them?  Nothing worse than a firm that takes on too much work, and you cannot get hold of them.
  5. Fees : Will they give you a fixed and or understandable quote up front for fees? Open ended time billing fees are not good.   Time billing can be right for some deals, but you should be able to get an estimate, and transparency as the transaction progresses to let you manage it.
  6. Incentives : If you can get part of the fee success based then you have better mutuality of objectives.  For example on a disposal you can usually get some of the fee linked to the price achieved for the company.

Finally follow your gut instinct.  If you don't like the person pitching to you, you are probably right.  If you do like them, and they have appropriate credentials you are probably right.  In most venture capital, MBO or M&A deals you will spend a lot of time working together - so it's important that that is not a daunting idea at the outset!

What's in a name

OK this is a Caledonian rant. 

The Institute of Chartered Accountants in England and Wales (a johnny come lately organisation compared with the venerable Institute of Chartered Accountants of Scotland - of which I am a member) is merging with CIPFA. 

Not very interesting you may say.  Well ok not in itself - but as part of the merger ICAEW would like to restyle itself the Institute of Chartered Accountants.  This has caused much angst from similar bodies around the world from New Zealand to Scotland.  The long standing custom is for geographic designation.  Why should ICAEW unilaterally and inappropriately annexe the name? 

The specious reason given by ICAEW use to justify this name is that they are geographically restricted by the reference to England and Wales. Unconvincing!  Members of ICAS and ICAEW currently operate all over the world and have done for decades.  The name of the Institute does not restrict the ambitions of its members to be business leaders outside a national boundary. 

I think this can easily be resolved by a wee bit of redrafting of the English institute's name, it should follow the example of the Scots by changing one little word - ICAS members are OF Scotland, not IN Scotland.   I give this piece of advice free of charge to ICAEW and without seeking any royalties on the new name!

ICAS was founded in 1850 some 25 years before even PEM was founded and 30 years before ICAEW.  This is why Scottish Chartered Accountants are CAs with out the need for extra letters to make them ACA or FCAs.

If you should like to object to the English name change, email the Clerk to the Privy Council at [email protected]


It has been a good spell for newsflow at PEM with three good stories in the space of a week or so:-

We had fun doing the Chalkface press release, as CEO Ian Grove-Stephensen quite reasonably wanted to avoid the usual cheesy handshake photo - so we did something quite different, follow the link and see what you think.    This even rated a mention in Ian's blog.  Any ideas for non standard PR photos gratefully accepted - I have another release to do shortly.

I have also started including my blog address on my email signature, time to stop blogging in secret!

The art of saying NO

Sorry this is going to be a bit of a rant.  Why is it that so many Venture Capital investors who are astute business people have failed to go on the training course on the fine art of saying no with style.  I have been VC fund raising for a couple of clients recently,  and as you would expect have had some declines along the way.

Here are some of the generic styles (no names to protect the innocent and not so innocent) .

  1. The "doesn't fit our investment criteria" decline.  Delivered by email usually so there is absolutely no idea why not.  Still no arguing with that.
  2. The email with various reasons for decline, none of which make any sense in the context of the proposal you have sent them....this guy hasn't read it.
  3. The "Doesn't even bother to decline or acknowledge until someone chases you"  decline.
  4. The VC who calls you, thanks you for letting him see the proposal, but explains why it's not for them.   This guy has been to the VC charm school and is worth getting to know.

Not every proposal gets funded of course, but we'd love them all the more if they could respond with Decline Style 4 or at a pinch Style 1.   

As for the long periods in between when one hears nothing............"your proposal is held in a queue and may or may not be looked at eventually"..........maybe I lack the patience for this game, but we are all quite ready to complain about being held in a queue as consumers, why should the interaction with the Venture Capital community be any different?