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What makes a business attractive?
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Having enjoyed almost four years in a busy Audit and Accounts team whilst completing the ACA, in August 2021 Samuel Reynolds embarked on a new challenge joining PEMCF in the exciting world of M&A and has since been promoted to Manager in 2023.
The most common question I was asked before I transferred was “so what will you actually be doing in Corporate Finance?”. My interpretation, based on what I could gleam from the internet, was that it would involve advising on transactions and taking pictures with clients holding a glass of fizz to toast a job well done.
Unfortunately, blindsided by the number of successful deals PEMCF were completing at the time, the toasting of champagne is a significantly smaller part of the role than it appeared from the outside but an important part nonetheless!
Despite “Corporate Finance” alluding to brushing shoulders with big corporates, most of the work undertaken still involves working with owner-managed businesses (typically with an Enterprise Value between £1m-100m) and projects tend to fall into one of four main categories: Sale mandates, Management Buyouts (MBO), business valuations, and Financial Due Diligence (FDD).
PEMCF’s mantra is to be advisers ‘from cradle to grave’, meaning providing guidance and advice at all stages of a process. For a sales mandate that might consist of researching potential buyers, financial modelling to help raise funds, leading negotiations with potential buyers, or providing an exit strategy review to help owners assess their options for exit later down the line.
Whilst having minimal advisory experience when I joined the team, an audit background has given experience of handling financial information in varying forms (and quality) and a strong understanding of what the numbers represent, helping to form the basis of the appropriate advice to a client.
One of the main things I enjoyed about audit was visiting clients on their premises and seeing how a variety of businesses operate and make money. My Corporate Finance Executive role still involves seeing and talking to clients and an occasional site tour still makes its way into the diary.
However, helping advise on a sales mandate or MBO has enabled me to see the next stage of a business lifecycle, whether that be for a full sale or a partial release of equity to bring in a new investor to help drive future growth, and gaining an insight into what goes into getting a successful business to where it is today.
Additionally, whilst in audit I spent a significant portion of time with clients but often intermittently in line with audit cycles. At a senior level in PEM, in both Audit and Corporate Finance, there is a long-term fostering of the client relationship, but I now typically spend a longer period with clients, with some projects taking up to 12 months, facilitating a more in-depth relationship and making a successful sale even more rewarding.
The biggest transition personally was moving from compliance and regulatory work, into advisory – no longer was every adjustment proposed defendable by FRS or IAS. However, being able to provide advice that has a ‘pound note’ value to clients is its own reward.
Another big change was moving to project-based working, my working life was no longer mapped out in front of me for the next 12 months on a work planner and holiday requests are now approved without having to worry about staffing for a job over a month away.
A change that accompanied the move into advisory work is that a larger portion of the working day becomes reactive. As expected, transaction or share issue dates get closer, issues arise that need addressing there and then. As used to be the case, the working day could be planned around which section of the audit file is outstanding but now in Corporate Finance plans can change multiple times within the same day. The mix of each project having its own quirks and the dynamic working environment results in no two days being the same, which as a young(ish) professional looking to develop is something I very much enjoy!
As part of the move into advisory work it also shifts the purpose of the work being completed day-to-day. Any testing (i.e. work programme checklists) is no longer required for the sake of regulatory compliance. Whilst some tests may be similar in the conduct of FDD, all tests are for the purpose of protecting those you are acting for and in areas of risk to your client.
I was briefed upon starting PEMCF that the Corporate Finance industry is one of “feast or famine” when it comes to workload, but with the post-Covid market more buoyant than ever, with vendors having ridden through their final storm and investors with cash burning a hole in their pocket, the last ten months has been one continuous feast and is showing no signs of slowing down. This has culminated in a perfect environment to learn in, with plenty of activity to give me exposure to an array of businesses and their own unique challenges which otherwise would take a lot longer to experience.
One thing I have taken away from my move into Corporate Finance is that the experience I am gaining in the transaction and valuation process will make me a more rounded professional, with experience that would be applicable in many other career paths. Whether that be moving back into audit or another practice sector, moving into industry, or even Private Equity.
My message to those recently qualified or nearing the end of their training contracts in Audit and Accounts, is to look at the plentiful opportunities for a career in Corporate Finance – please reach out to me if you would like to discuss in further detail.