What is corporate finance?

What is the definition of Corporate Finance?

In the United Kingdom, Corporate Finance primarily covers the raising of new capital, M&A and associated services (such as financial due diligence), management buyouts (MBOs), and business valuations.

Corporate Finance is incredibly important when it comes to understanding and optimising the value of a business, particularly when planning growth or exit strategies.

Corporate Finance activity can include:

• Mergers and Acquisitions (M&A): The sale or acquisition of a business
• Management Buyouts (MBOs): Second-tier management buying equity participation in the business
• Business valuations: Determining the current value of the business
• Exit Strategy Reviews: Understanding the options available as a business owner, and putting a plan in place to achieve the desired exit
• Financial Due Diligence (FDD): Looking under the bonnet of a potential acquisition to gain assurances in the information provided
• Listing a private company through an Initial Public Offering (IPO)
• Delisting of a public company
• Raising funds through debt or equity to help facilitate future growth of the business
• Release of capital from a business: A full sale may not be desirable but de-risking and taking cash off the table is an option for a business owner – potentially to a trade party, Private Equity or a Venture Capitalist depending on size and appetite

The role of Corporate Finance advisers

It’s worth noting the nuance between advisers and brokers – brokers primarily facilitate deals, finding two parties that may have an interest in a transaction. After making the introduction and helping with the initial discussions, they leave the parties to agree the finer details between themselves and take a commission.

Advisers can help find potential buyers/acquisitions or be engaged when a party, or parties, have already been identified for approach. Advisers are engaged by a business from “cradle to grave”, providing a client with advice on Corporate Finance matters such as preparing a business for sale, setting up introductions with potential parties, and advising through negotiations and key document drafting to achieve the best possible outcome.

Where do business owners go for Corporate Finance advice?

Within a business, large conglomerates with experience in the M&A market may turn to in-house Corporate Finance expertise to guide them, but for most, the above activities will only be undertaken a handful of times, if at all. As such, enlisting the help of a trusted, experienced Corporate Finance adviser/consultant can be invaluable.

Advisers can come from independent Corporate Finance boutiques, accountancy practices, law firms or investment banks, each with their merits.

Who are PEM Corporate Finance?

Our Corporate Finance advisers and consultants have expertise in all aspects of Corporate Finance, apart from listing/delisting companies. We are also part of one of the oldest accountancy practices based in Cambridge, drawing on the expertise of over 200 colleagues, all under the same roof. This is particularly useful when considering tax implications of transactions, funding rounds or future tax planning.

Whilst we can’t provide legal advice, we have a large network of lawyers we can introduce to draft key legal documents, ensuring the commercial integrity of the agreed deal is captured.

If you are seeking quality Corporate Finance advice for yourself or your business, please speak to one of our advisers today.