Where are the opportunities for OMB shareholders in 2024?

How can shareholders de-risk their position?

What is the best advice to unlock the full potential for the business and the shareholders?

There has been a vast volume of articles on Insider, Business Desk and LinkedIn in the first two weeks that have given some valuable information to answer these questions and paint an encouraging picture for the coming year.

Our pipeline emphatically supports this picture – our executive specialisms were busy throughout December and into the New Year, with the vast majority of work within SMEs. This ranges across all sectors, and from long-standing family-owned businesses to start-ups with (or looking for) VC funding. Our current Finance Director search at Pure Pet Foods in Cleckheaton is a perfect example – a business that has built strong foundations over the past 10 years, secured VC investment, and is now looking to grow at a rapid rate.

Amidst the wealth of information available to shareholders, it is crucial to pinpoint every consideration. We have already looked at getting the right Finance Director, finding the right time to sell, and securing private equity investment. As we enter 2024 with the expectation of so much change around interest rates, tax, and inflation, we have been looking more at some of the high-level considerations that shareholders should be making.

We spoke to Alex Baskeyfield, M&A Partner at Mazars in Leeds to get his insights:

"West Yorkshire is a region known for its thriving and diverse business landscape and is home to a multitude of SMEs which contribute significantly to the local economy.

In recent years, the SME sector in Yorkshire has shown incredible resilience and adaptability in the face of economic uncertainties. Confidence remains robust, with many businesses demonstrating optimism about growth prospects. Factors such as access to diverse talent pools, strategic geographic location somewhat protected from the high overhead environment in some parts of the South, and supportive local business networks contribute to the positive sentiment among SMEs.

Despite the overall confidence, shareholders often find themselves grappling with various challenges that impede the growth or exit strategies for their businesses. Some key headwinds faced by SMEs can include:

Economic Uncertainties

We seem to be in a time where global economic uncertainties are continually dominating our news - whether that’s geopolitical tensions disrupting supply chains and driving foreign currency fluctuations, or disruptions to shipping and access to international markets. These headwinds can create caution in the large corporate world and that caution trickles down to the SME landscape.

Access to Funding

West Yorkshire offers a supportive business banking environment, however securing funding for expansion can sometimes be a hurdle. The high street banks are often the first port of call for a business requiring funding, and while the mainstream banks are generally supportive of growing businesses, their funding structures are relatively rigid and won’t suit every business. There is now a diverse and sophisticated spectrum of specialist banks that thrive on offering funding solutions that the high street banks can’t match. However, access to these specialist funders is often difficult for businesses to gain directly, and sometimes requires an advisor to successfully navigate.

Succession Planning

Many SMEs in the region are family-owned, and planning for a seamless succession can be a delicate process. Balancing family dynamics, leadership transitions, and business continuity adds another layer of complexity.

Despite some of these headwinds, I continue to help a record number of clients exit their businesses. It felt like the markets paused for thought temporarily in 2023 but have now returned to their longstanding resilience for the turn of 2024. The world of M&A in the region is remarkably robust.

For shareholders considering an exit in the future, seeking guidance from a knowledgeable corporate finance advisor early on can be crucial to maximising value on an exit. For the vast majority of business owners, they will only sell one business in their working lives. It’s therefore really important to get the timing of an exit right.

I am often in conversation with my clients for several years, helping them to develop a clear plan that times an exit with positive market sentiment, good business performance, and strong balance sheet value. Don’t be afraid to take advice early on how to align your business for an exit."

Summary

Time will tell what will develop in 2024, but we are all a lot more conditioned to unexpected events than we used to be. We have worked with so many OMBs with outstanding performances in the last year, and we continue to be introduced to new relationships. We are looking forward to seeing how these businesses will unlock more of their potential in 2024.

We are talking to several other investors, advisors, CFOs, and company owners, and will be sharing their advice over the next few weeks.