Corporate Finance Market Offers Growth

Firms are looking to invest and expand, according to a Norwich accountancy firm which has itself branched out and taken on new staff. M+A Partners, in a joint venture with business adviser Moore Stephens, launched M+A Corporate Finance last year.

It says it has worked on deals ranging in value from £250,000 to £50m and has now taken on a second member of staff. Director Christian Schosland said: “Whilst it has been a difficult period for corporate finance businesses generally, we have nevertheless managed to complete nine transactions, including the sale of Ipswich-based PetroTechnik to US buyer Franklin Fuelling Systems, and the acquisition of Norwich-based engineer Arthur Birchall Coatings.

“We have also helped two local businesses, Reeds of Downham Market and Norfolk Premier Golf, with bank fund raisings, which shows that banks in this region are lending again, providing you present a well-thought-out business case for doing so.”

He said there were also a number of financial institutions willing to help bridge the funding gap between bank debt and private equity for the likes of management buyouts, acquisitions or capital investment.
The firm, based in The Close, Norwich, has also recruited Chris Sheasby from private equity firm Key Capital Partners, where he spent three years investing in local small and medium-sized businesses.

Mr Schosland and Mr Sheasby previously worked together in the corporate finance department of Deloitte.
Mr Sheasby said: “The corporate finance market has been somewhat anaemic of late, but the future is brighter. “We are increasingly seeing companies with compelling investment cases.”

Corporate Finance Transactions Going Under Microscope

Liquidators of Strategic Finance say they are investigating transactions connecting company directors and third parties and are "progressing pursuit of possible avenues for recovery". The finance company, likely to repay just a fraction of the $360 million it owes investors, is also under investigation by the Securities Commission.

In their latest liquidators' report filed on February 17, John Cregten and Andrew McKay of Corporate Finance said they had "identified a number of transactions which require further investigation" but gave scant information about their progress or chance of getting money for creditors.

It was impossible to say when their job would be complete, they said, "as this will depend on any action the liquidators may take in respect of transactions entered into by the company prior to liquidation".
Mr Cregten told BusinessDay the biggest problem had been collating the volume of documents.

"It just takes time," he said. "In the next six months we should be able to say what progress we've made."
He said the transactions being investigated involved "both directors and third parties".
Strategic's directors are Kerry Finnigan, Jock Hobbs, Graham Jackson, Marc Lindale, Denis Thom and David Wolfenden.

No receipts or payments were made in the liquidation since their appointment last July.The main responsibility for recovering money so far is on receivers John Fisk and Colin McCloy of PricewaterhouseCoopers, who are trying to realise cash from Strategic's property development loans.

Since their appointment last March about $9m has been recovered and $7.4m was paid to investors in September.

The estimated recovery is between 12c and 35c in the dollar, before costs.Last month, receivers said they had identified several transactions between December 2007 and August 2008, when Strategic collapsed, warranting further investigation.One was being investigated by SFL's liquidator and the rest by the receivers, they said.

Strategic Corporate Finance Liquidator Probes Transactions

The liquidator of disastrous property expansion financier Strategic Finance says although he's putting a few transactions under the spotlight, nothing originate so far is likely to be reported to the grave Fraud Office.

Andrew McKay, Corporate Finance director and Strategic liquidator, said the liquidators were investigating "a few" Strategic transactions dating from within 24 months before their meeting on July 26 last year.
These were the same transactions the receiver, which is helping with the Securities Commission's investigation into Strategic, has raised potential concerns about, McKay said.

His comments come as Corporate Finance releases its second liquidator's report.

McKay said the Strategic transactions being looked at date from within 24 months of the liquidator's appointment because they are the ones that are "potentially voidable" under the Companies Act.

"So they're the ones that we can investigate," McKay said, adding the liquidator would investigate "some" of the "few" transactions that it believes require investigation.

It would probably be "six months or so" before Corporate Finance decides whether to take any action or not.
The Securities Commission is investigating all the dozens of finance companies to have failed in the past four to five years.

And Serious Fraud Office CEO Adam Feeley said last month the SFO, which has opened investigations into several finance companies in recent months including Hanover Finance, Mutual Finance and Rockforte Finance, was in "ongoing discussions" with the Securities Commission.

"I think it'd be fair to say that in the next few weeks we will have a clearer view on whether that's a matter we take forward or not or whether it's something the Commission takes forward or not.

"But at the moment it's not an investigation and whether it becomes an investigation, at the moment we don't want to get drawn on that," Feeley said then.

Today McKay said the liquidators had not turned up anything "that we'd be rushing off to them (the SFO) at this point in time."

"We're working with the receiver, trying not to duplicate between us," McKay added. "Otherwise we're just wasting money and neither of us are in to that."

"We're in the collation and collection phase of documents and then we'll move to an analysis phase in conjunction with our legal team," McKay added.

According to its website, the Securities Commission's investigation into Strategic began in August 2008 and is continuing.

Strategic was tipped into receivership by its trustee Perpetual Trust last March.

Receivers John Fisk and Colin McCloy of PricewaterhouseCoopers say the about 10,000 secured debentureholders are likely to get back between 12 per cent and 35 per cent, or between NZ$44.1 million and NZ$128.7 million, of the NZ$367.8 million principal investment owed to them.

They've so far got back just 2 cents in the dollar.

Debentureholders, including the Bank of Scotland which is owed NZ$76.1 million, are Strategic's secured creditors.

Unsecured Strategic creditors, including unsecured depositors' owed NZ$1.45 million and subordinated noteholders owed NZ$21.7 million, are unlikely to get back any money at all.

Strategic, whose CEO was Kerry Finnigan and which counted former All Blacks captain and ex-New Zealand Rugby Union chairman Jock Hobbs among its directors, froze repayments to investors' in August 2008 blaming tough conditions in the property market.

Investors' then voted for a moratorium in December 2008 that aimed to repay them 100 per cent of their principal investments plus interest through asset realisations over five years.

Perpetual Trust subsequently called in the receivers after Strategic failed to generate sufficient loan recoveries for a repayment to investors' that had been due in January last year, and failed to sway the trustee with suggested alternatives to receivership.

Finnigan said last year that he didn't expect himself, or the rest of the company's leadership, to face any charges stemming from investigations into Strategic's demise.

"We don't think we've done anything wrong," Finnigan said then.

Canadian finance ministries closed off from web after cyberspy hack China

Corporate Finance News

Chinese hackers were accused of looting of sensitive documents from the Canadian government, which requires two departments of the Internet as a response. CSC reports that the attacks, the first time in January, goes back to the computer networks of China - noted the important proviso that commitment systems in China could have been used by others to cover their tracks.

Attacks on computer networks of destination and the Department of Finance and the Ministry of Finance of Canada's key government departments of economics. Internet access and the department was limited to the discovery of the attacks last month. Involved in the attacks targeted spear-phishing attacks designed to mislead government officials to hand over passwords and the use of malware.

The pattern of the attack matches that GhostNet assault that penetrated 100 other governments around the world back in March 2010.

Information Warfare Monitor, the Canadian group that detected those attacks, was reportedly asked to run an audit of government systems by the Canadian Security Establishment (CSE), a little-known armed forces division that serves as Canada's signals intelligence agency. The audit revealed that the two Canadian economics ministries had been comprehensively compromised, a problem not uncovered at the time of the original Ghostnet investigation some months before.

Sources involved in the investigation spoke to CBC News under the proviso that they would remain anonymous. Quizzed by CBC, federal government spokespeople would only say that an "attempt to access" federal networks had been detected.

In June 2009, warned the Canadian Security Intelligence Service that cyber-attacks against government systems and the private sector were up sharply. China, later blamed for cyber attacks against companies targeted the least energy data on discoveries of oil and gas field which have been blamed by some on the government spying charges that the Chinese government has always rejected. Furthermore, Google last year publicly criticized China Operation Aurora attacks against him and other hi-tech companies.

After Joining Corporate Finance Network Fenland Accountancy Firm to Develop a Centre of Excellence

A FENLAND accountancy firm has joined a national network that provides SME-specific expertise required for deals of up to £3million.

Whiting and Partners’ affiliation to the Corporate Finance Network is regarded as an important development for the firm, which has 130 staff in March and at seven other locations across Cambridgeshire, Suffolk and Norfolk.

The move reinforces the firm’s focus on small and medium enterprises (SMEs). It already has well-developed experience in the sector and provides clients with a realistic approach to business planning.

Chris Kelly, heads of the firm’s corporate finance team, said: “Joining The Corporate Finance Network is important because not all accountants have the knowledge and expertise required to handle deals up to £3million.

“It will give us an edge and help us to develop a centre of excellence in providing finance solutions and formalise our service standards.”

Whiting & Partners’ specialist group will be supported by members of the Corporate Finance Network’s executive team. Its expertise extends from owner-managed businesses aiming at commercial acquisition and includes due-diligence investigations, business planning, exit strategies and securing finance.

Kirsty McGregor, chairman of the Corporate Finance Network, said: “Our members are regarded as experts in their regions for obtaining the most appropriate finance for businesses and for buying as well as selling companies with a transaction value of less than £3million.

“The number of firms who can advise SME clients in this highly specialized arena is limited. We believe that Whiting & Partners is ideally placed to take advantage of the growth in the Eastern Region and can provide a high quality and dedicated alternative to national and other regional firms.”

Government 'Focused on World Exports to Rebuild Economy'

The UK recovery will be driven by a boost in world exports, it has been said.

The government is putting its focus on encouraging world exports as it believes this is the way to boost the country's economy, a corporate finance expert has said.

Georgia Raimes of foreign exchange broker World First voiced her opinion on the importance of exports in helping fiscal recovery for the UK.

She stated that as Britain is not a major exporting nation like Germany and China, it is "not as big a factor" as it would be for those countries.

However, she went on to say: "The government has been focused on rebuilding exports and allowed the pound to devalue in order to assist this."

Therefore, Ms Raimes stated that it is "key in the overall recovery" of the UK's economy, which corporate financing groups may wish to take note of.

Her comments follow a report from the Ernst & Young ITEM Club released last week, which predicted that there will be a period of growth for UK exports.

It said this will be driven by focusing exports towards Brazil, Russia, India and China, as well as an increase in competitiveness as a result of the weak sterling.

Corporate Finance Planning Begins to Reflect the Upturn

Strong indications of an increase in U.S. corporate innovation and productivity for 2011 emerge from a late-December survey of finance executives released today by CFOworld.

Among other findings indicative of the state of mind of CFOs, the survey showed that 44% expect technology and consulting budgets to rise this year, with 45% saying they see IT budgets remaining flat.Indeed, tech and consulting represent the highest level of expected increases seen by respondents. Increased spending on mergers and acquisitions is anticipated by 21%. For other expected cost rises, though, the cause of the increase is more reactive. Among 27% of executives, for example, higher insurance and risk management costs are anticipated this year. And 20% see higher banking and finance costs.

More than a third of respondents expect budget allocations for employee benefits to increase, although half are predicting that they will be able to hold the line.

Corporate Finance

IT's Cost and Complexity

While spending on tech may be rising, CFOs do voice concern about the cost increases for what they get (69%) and the increasing complexity of IT(58%.) The efficiencies and possible savings from cloud computing may provide relief for some of those concerns, however, with 64% saying they have interest in lessons and best practices that could be learned from early adopters and alternative IT models.

When it comes to other concerns facing corporate finance, 57% percent worry about high rates and fees for their banking and finance business, while the difficulty of securing financing troubles 35% of them, giving pause about whether they can close M&A deals. Further, 84% are concerned about the cost of insurance as they plan their insurance and risk management budgets for this year.

The CFO More as Partner, Less as Advisor

Evident from the survey responses, too, is the strong collaboration that has been developing between finance executives and CEOs. Indeed, 57% of the respondents overall say they are partners with the chief executive. Far fewer see themselves as advisors who provide strategic guidance when the CEO seeks it (28%), while only 14% considers that they are in the role of "the numbers person" at their company.

The survey was conducted by email from Dec. 14 and Dec. 23 among finance executives of the IDG Enterprise audience. IDG Enterprise, part of the International Data Group of publications, is publisher of the new CFOworld online site, as well as such titles as Computerworld, Network World and CIO. CFOworld based its results on 180 responses from executives of a range of companies including manufacturing (19%); services and retail (14% each); tech, telecom and utilities (a total of 12%); financial services (9%), and healthcare (7%.) Slightly more than half the responses were from companies with fewer than 500 employees. Companies represented by the survey had average revenues of $3.58 billion and more than 7,600 employees.
Finance executives also now claim that online resources are delivering fully 46% of their information about corporate finance matters, according to the survey's findings.

Andrew Walls Joins Leeds Corporate Finance Boutique

LEEDS-BASED corporate finance boutique Ethos has appointed accountant and former finance director Andrew Walls as a partner.

Walls joined Begbies Traynor in 2003, before moving to McInnes Corporate Finance providing advisory services on M&A transactions.

"His blend of corporate finance, turnaround and banking experience together with his role as finance director at a property business makes his approach perfect for the firm, and the deals we are driving for our clients," said Silverwood.