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07/10/2014

Succeeding through succession

*Article originally from the Evening Post Business Supplement

Starting up a business is not the only route to owning your own business. Acquiring an established business is another option and potentially a better choice for some.

Chris Griffiths, Fund Manager and succession expert at Finance Wales believes that the next generation of Welsh business managers are increasingly taking advantage of opportunities to buy into existing businesses.  Finance Wales has so far backed new management teams with over £29 million, helping them acquire 91 businesses.

Griffiths believes that with the right backing there are an increasing number of opportunities open to ambitious, committed management teams.  He also believes that there are significant benefits for the Welsh economy as a whole.

“An estimated 1 in 5 business owners in Wales have run their businesses for over 20 years and an increasing number are considering their options with a view to realising the value they’ve worked hard to build up. This is good news for aspiring and ambitious Welsh entrepreneurs and management teams because there are more acquisition opportunities.

“Passing the baton of business ownership to the next generation of managers can be an attractive option and if the process is properly managed, it can be a great way of ensuring business continuity. The existing owner can take a step back and benefit from years of hard work, while the new owner can inject new impetus into the business, enabling it to go from strength to strength and creating more value on their original investment.

“We’ve seen a significant rise in these types of deals in the last year and Finance Wales can provide existing managers thinking of a management buy-out, or those looking to buy into a business, with a funding package tailored to their individual needs.”

Wales Environmental has grown significantly following a management buy-out by Managing Director Dave Busby and Business Development Director Llyr Williams in 2011.

Now one of the UK’s fastest-growing waste management companies, it received funding from Finance Wales earlier this year to purchase Cardiff Drain Cleaning Company as part of its continued expansion.  

“Acquiring Cardiff Drains has allowed us to expand the business faster than it would have taken us to grow organically. The acquisition is a key part of our long-term expansion strategy. It has significantly increased our capacity as well as our client base and also provides us with an operating base in Cardiff,” explained Dave Busby.

Griffiths is keen to dispel some of the common misconceptions around successions: “Existing owners can mistakenly believe their management teams either aren’t interested in buying the business or can’t raise the necessary finance.  Equally, many managers who’d like to own their own business are often unaware of the funding options open to them.

“We’re keen to clear up some of these misconceptions and demonstrate how succession investment can help them achieve their ambitions,” Griffiths concluded.