The Business Magazine

Writing a great deal of finance and business related articles over many years.

Deals are definitely back

Filed in: , barclays, mergers and acquisitions, corporate finance, rice associates, baker tilly, charles russell, corporate, lehman, buy-out

It’s been a long haul but 2010 has seen the return of mergers, acquisitions and buy-outs and the outlook for 2011 is positive, writes Richard Willsher.

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Deals are definitely back

It’s been a long haul but 2010 has seen the return of mergers, acquisitions and buy-outs and the outlook for 2011 is positive, writes Richard Willsher.

In the ␣rst nine months of the year the global volume of announced mergers and acquisitions totalled jus over US$ 2 trillion (£1.24 trillion), according to research from Dealogic. That was 22% ahead of the same period in 2009. But signi␣cantly both in the bigger picture and locally, it was in the third quarter of the year that the market really began to be con␣dent. Worldwide, Q3 saw announced deals amounting to US$792 billion, (£492 billion) 55% up on the third quarter of 2009.

Closer to home the UK accounted for 24% of all European M&A during the ␣rst nine months of the year, which may have been boosted by the weakness of Sterling versus the Dollar and the Euro. Also, out of a UK total of US$140 billion (£87 billion) however, US$21.5 billion (£13.34 billion) was accounted for by GDF Suez’ bid for British company International Power.

More striking is the volume of UK buy-out activity. “The overall value of UK buyouts in the ␣rst nine months of 2010 reached £13b,” reports Nottingham University’s Centre for Management Buyout Research (CMBOR). “[this was] more than double the total value of buyouts for the whole of 2009 (£5.6b).”

Commenting on these numbers Christiian Marriott, a Director at Barclays Private Equity, said, “Con␣dence is returning to the private equity buyout market with private equity deal ␣ow dominating the overall M&A market in the UK in the ␣rst half of this year and an increase in consumer-related transactions. With several large deals in the pipeline, we might see the year ending at near 2008 buyout levels.”

If this is the overall picture, how has this been re␣ected in the activity in the South East of England? We asked several local deal doers for their perspective.

“It has been a year of two halves in many ways,” says Andrew Clayton, Reading-based head of corporate and structured ␣nance for the Thames Valley and South East for RBS. “In the ␣rst half we saw several deals in the upper mid-sized corporate market. These included Pets at Home, Card Factory and Camelot that were all quite substantial. It wasn’t until later in the year that deal ␣ow in the mid-market, in the £25 million to £75m range, really developed momentum. For example we’ve seen deals for United House, the social housing ␣rm, which we funded with Lloyds Development Capital and Leaders, the lettings business where we worked with Bowmark Capital. Now, with six weeks to go to the end of the year I would say that our work in progress is now as strong as its been for the last two or three years.”

Nonetheless advisors such as accountants and solicitors say that deals are still taking a long time to complete. Bank approvals for funding propositions are taking longer and the processes are more rigorous than prior to the 2008 credit crunch and the collapse of Lehman Brothers. But at least the system isn’t as petri␣ed as it was.

“We are now seeing a lot more activity,” says Richard Somerville, a director of Rice Associates, the Wokingham-based accountants and business advisors. “There are a lot more exit strategies for business owners who are talking about buy-out possibilities whereas a year ago there was no point in even talking to the banks.”

At solicitors Charles Russell, Oxford- based partner William Axtell says, “We have de␣nitely seen an upward trend in terms of corporate ␣nance activity this year. Charles Russell have seen a decent amount of sell and buy side M&A, private and public fundraisings including three initial public oerings (IPOs) earlier this year. However, in relation to M&A, the availability of funding is still problematic and there is often a mismatch between sellers and buyers in terms of value.”

But taking a rather dierent tack Andrew Killick of accountants Baker Tilly points out that banks are “now doing their job properly in the way they assess risk.” He stresses the importance of understanding how to present a case for funding to a bank or private equity house. “You need to look at it from the funder’s point of view rather than just the perspective of the business that is seeking the ␣nance.”

This approach has stood Baker Tilly in good stead and has enabled them to complete a number of deals in the year to date. He says that there is no shortage of cash, for example among private equity houses and that good businesses with strong propositions will always be able to ␣nd the funds that they need.

Looking ahead to next year there is general optimism among the corporate ␣nance community. RBS’ Andrew Clayton says, “While we may complete two or three more deals before Christmas, because processes are taking longer I’m expecting more completions in Q1 next year. I think it will be quite busy but also it is likely that some of those transactions which we’ve been discussing this year may come to the market in the ␣rst and second quarter.”

Jonathan Hughes of Leumi ABL, the asset based lender believes that in 2011 there are likely to be more non-core disposals and strategic acquisitions now that the cycle looks as though it has reached the bottom.

At Charles Russell, William Axtell’s view is cautiously optimistic. “We think that 2011 will continue on the same upward trajectory that we have seen in 2010. Although global economic conditions remain choppy, recent GDP ␣gures suggest that a steady recovery is underway. As con␣dence grows along with the recovery we see corporate ␣nance activity increasing and we are well positioned as a ␣rm to capitalise on this.”

At Rice Associates, Richard Somerville says, “I think the banks are going to need to get back to lending next year. They’ve weathered storm, beefed up their balance sheets, garnered their deposits and will be keener to lend. Yes, I’m optimistic.”

All in all not a bad outlook. It’s been a rough ride but 2010 may go down in corporate ␣nance annals as the year the recovery really took root. If so, 2011 ought to be the year when deals ␣ourish and bear fruit, despite all the talk of double dip and austerity.

Lending to SMEs

Filed in: , sme, banks, small business, bank lending, invoice discounting, business angels, funding circle, crowd funding, fsb

There is plenty of evidence to show that businesses are seeking out alternatives to bank funding.

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Lending to SMEs
There is plenty of evidence to show that businesses are seeking out alternatives to bank funding, writes Richard Willsher

In its August “Trends in Lending” report the Bank of England states: “Contacts of the Bank’s network of Agents [throughout the UK] noted that credit conditions for smaller businesses remained tighter than for larger corporates…” A two-tier market in bank funding is very real. “Some major UK lenders,” the Bank adds, “reported that spreads on lending to larger corporates continued to fall, but by a diminishing amount. Spreads on lending to small and medium-sized enterprises were little changed.”This explains why small businesses are finding their funding where they can, away from traditional overdrafts and term loans.

A spokesperson for the Federation of Small Businesses says that many smaller businesses are put off going to banks for credit because of extra charges that may be levied, such as arrangement fees or set up charges. This serves to increase the real cost of borrowing. “Our members [also] say that they fear that if they go to their bank to ask for a new loan or an extension to their overdraft it may trigger a review of all of their financing arrangements.”

Keeping it personal
Instead, small businesses often fund their businesses out of personal savings, with many new businesses being set up with redundancy money. This is a trend that may well increase in coming months of austerity. In a recent episode of BBC’s Dragons’ Den one of the founders of Zigo, a bicycle- mounted baby carrier business, said he had invested $1.3 million of his own money in the business. The Dragons were dumbfounded. Not every entrepreneur has that much personal wealth to put in, most need to look elsewhere, but where? The FSB says that friends and family are a very common source of working capital as well as equity. Credit cards are also commonly used as a ready source of cash, though it can turn out to be very expensive.

Joining the crowd
Another small scale source of borrowing, though that is not what it was set up to do, is the online lending and borrowing exchange Zopa, http:// uk.zopa.com/ZopaWeb/. Giles Andrews Zopa’s CEO says: “It is almost certain that some borrowers are using their Zopa borrowings in this way.” He adds that that is not necessarily of great importance to Zopa because borrowers are assessed on their ability to repay the debt, regardless of what they are going to do with the funds. The attractions of Zopa are easy to see. The borrower can probably borrow the funds more cheaply than through a bank, although only up to £15,000 and they may like the idea that the funding….is directly supplied by a range of small depositors, not by a large bank.

There is definite appeal to what in the US has come to be called “crowd- funding.” Zopa-like but recently set up to provide business funding is Funding Circle, http://www.fundingcircle. com/. It provides unsecured loans of between £5,000 and £50,000 at fixed rates for up to three years.

Traditional but alternative
Although invoice discounting and factoring accounts for something in region of £14 billion of outstanding advances at any one time, as Kate Sharp, chief executive of the Asset Based Finance Association, the invoice discounters and factors trade association, explains it is still perceived as being an “alternative” source of business funding especially among those “brought up on overdrafts and business loans.” However she goes on to point out that in providing finance directly linked to the sales of a business, invoice discounting maps the ebbs and flows in fortunes of a business.

Another source of financing is Finance South East (FSE). With offices across the South East of England, chief executive Sally Goodsell explains, “Many of our borrowers are young entrepreneurial companies and technology businesses that are looking to grow. We are open for business and we do some of the lending that the banks have simply stopped doing; for example, cash flow lending to growth hungry businesses. We are not here to finance lifestyle or steady state businesses. We are looking to lend to and invest in companies that are ambitious… They are often knowledge based business that are scalable and are looking to expand beyond their home markets.” Such funding may also attract additional funding from the banks once FSE is seen to be involved.

Don’t forget the angels
Although they are mainly interested in equity investing, business angels often provide more than just that. Angel investing expert Chris Clegg, who provides training for business angels, notes that many provide debt as well as equity. Indeed when a BBC Dragon says he is prepared to put a sum of money into a business, those funds may be partly in the form of equity and partly in the form of debt. Angel debt
funding may take the form of preference shares or may be convertible to equity under given circumstances.

There are several non-bank sources of funding which can suit the circumstances of particular business. What may worry the banks is that when a business taps such alternative sources of funding its managers may question just how much they really need banks involved in their business in the future, when the price can be so high and the terms so onerous.

The West Side Story

Filed in: , sme, heathrow, small business, london, property, business, location

As a business location West London is bigger and more powerful than you may think.

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The West side story
As a business location West London is bigger and more powerful than you may think. Richard Willsher of The Business Magazine explains

The next time you rail into Paddington or drive the M4 or M40 you might like to consider this. The six London Boroughs of Brent, Ealing, Hammersmith & Fulham, Harrow, Hillingdon and Hounslow with their 1.4 million people have a population greater than Birmingham’s and an economy bigger than Frankfurt’s. Three quarters of a million people work there at 67,000 businesses and the region contributes £32 billion each year to the nation’s economy. Within the area lie Heathrow, the world’s busiest international airport and Park Royal, which is Europe’s largest industrial estate. Vital statistics to die for if you’re looking to attract businesses and investment to your backyard.

Yet the noise surrounding London as an investment location is dominated by Docklands’ towers, the City’s financial services hub, the East End’s Olympic ambitions and the West End’s swanky squares. But if travelling to meet your colleagues or business associates in, say, Hong Kong, New York or Silicon Valley is important to you, where would be a more convenient location for your office, Hackney or Hillingdon? Just for the record, you can’t fly directly from London City Airport to any of these places but Heathrow serves 160 destinations around the world and offers 23 flights a day to the Big Apple alone.

Closer to home business organisation West London Business (WLB) calculates that within a 150-mile radius of West London there is a market of 20 million people. It is not surprising that many of the companies that are located in its 20 or so business parks or along the main transport arteries are service businesses that supply this population. Heathrow Airport alone through which more than 67 million passengers move annually provides jobs for 70,000 according BAA, which owns the airport.

Ian Nichol, director of the West London Alliance, which aims to promote the economic, environmental and social well being of the West London community, says: “West London offers businesses a range of unique strengths and particularly interconnectivity with national, European and international markets. Which is why many company headquarters or other office investments have been made in West London. It is also increasingly attractive to high-technology companies including IT and biomedical businesses because of its skilled labour force and locational advantages.”

WLB’s deputy chief executive and head of investor development Russell Harris says: “West London continues to attract new international investors from Europe, North America and Asia, whilst many of its existing major businesses have committed their future to the area. Just look at the Canon Europe decision to grow their HQ presence at Stockley Park. In the past few months we have also seen a number of high profile moves from central London to West London. These include, shopping channel QVC moving to Chiswick Park, the drinks company Diageo moving its London HQ to Park Royal, and GE Capital moving to its own building, the Ark in Hammersmith, following in the footsteps of media company Open TV, who moved there last year. To support future investment in West London, we will launching a number of area and sector investment propositions at MIPIM 2010, the world’s largest property and investment show in Cannes in March, where West London will have a presence on the London stand. These will help remind people of the strength and momentum we’ve always had in the West London economy. They will outline how strong the creative and media, ICT, bio/pharma, food and drink, transport and logitics sectors are, as well as giving vital information to potential occupiers, and investors and developers considering new opportunities”.

Although large and well-known companies like GlaxoSmithKline, Heinz, Adobe, IKEA and many more have premises in West London, perhaps what is not so well appreciated is just how many small business are located there. Roughly a third of the jobs, that’s 250,000 of them, are at SMEs.

All told, West London presents an impressive business case and has a critical mass of economic activity that on its own dwarfs that of many of Europe’s major cities. So the next time you scythe your way from the west toward central London spare a thought for the economic miracle that you are passing through. Without it London would be a very different city indeed.

Useful contacts:
The West London Investor Development Team:
Russell Harris 020-8607-2500 russell.harris@westlondon.com

The West London Alliance
http://www.westlondonalliance.org

Business banking in a time of change

Filed in: , sme, banks, small business, bank lending, banking, cruickshank, competition

Ten years ago the Cruickshank Report looked at competition in the banking industry and concluded that there was ‘market concentration in favour of big banks’ in respect of SME banking services. Has anything changed?

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Business banking in a time of change

Ten years ago the Cruickshank Report looked at competition in the banking industry and concluded that there was ‘market concentration in favour of big banks’ in respect of SME banking services. Has anything changed? asks Richard Willsher of The Business Magazine

Well not much according to the Federation of Small Businesses. They quote research from late last year that says that 83% of small business banking is in the grip of Lloyds, RBS, HSBC and Barclays. This leaves a variety of much smaller providers sharing the remaining 17%. The effect of Lloyds’ acquisition of HBOS was to concentrate the picture further, removing Bank of Scotland from the list of also-rans.

This is something that concerns the current Lib-Con coalition, and in particular Vince Cable’s Department for Business, Innovation and Skills. “We remain steadfast in our position that businesses should be treated fairly, charged appropriate terms and have reasonable conditions associated with borrowing,” the Department commented to The Business Magazine. “It is absolutely crucial to the economy that banks rebuild relationships with their customers and restore confidence to the market that they are able and willing to lend.”

The Department continued, “The Government has set up the Independent Commission on Banking, headed by Sir John Vickers, to consider the future of banking. This commission will consider the structure of the UK banking sector, and look at structural and non-structural measures to reform the banking system and promote competition with a view to ensuring that the needs of banks’ customers and clients are efficiently served.”

Meanwhile banks say they are willing to lend but that many smaller businesses are not willing to borrow. Larger corporates are borrowing, according to the Bank of England but many of those also have access to the wider capital market, which is denied to smaller businesses so their funding needs may not be as desperate.

It is against this background that either through government intervention or through new competitors coming to the market we may see developments in business banking over the coming months and years. One direction that this may come from could be Santander. With Abbey and Alliance and Leicester - both with business banking offerings when separate banks - now under its wing, it is keen to make its presence felt. “Our business is to understand our customers’ business as this is the only way we can provide real shape and real substance to the offer we make,” says Vanessa McCormack, Santander’s regional director “We respect the unique nature of each and every business in the Thames Valley region and we believe that developing strong long-term relationships is mutually beneficial. That’s why our relationship directors maintain an ongoing dialogue with their customers in order to provide bespoke support when it is required, both through the good times and the bad.” This, in urbane banker-speak, may well be fighting talk.

Santander will not be the only bank looking to grow its share of the market but it is, remember, one of Europe’s largest and has the resources as well as a significant and growing footprint in the UK.

Businesses will be watching this space with a keen interest to see how the battle shapes up. Added to the likely deflationary effects of the Government’s austerity measures which may adversely affect a large number of businesses and their bankers, a new shake out in the banking sector may well be just around the corner.

Deals and lending slow to recover

Filed in: sme, corporate finance, corporate, credit, aim, buy-out, lending, deals

While there is widespread acceptance that higher taxes and public sector spending cuts are on the way, the big issue worrying businesses right now is constrained bank funding.

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Deals and lending are slow to recover

While there is widespread acceptance that higher taxes and public sector spending cuts are on the way, the big issue worrying businesses right now is constrained bank funding, writes Richard Willsher.

It all depends who you are. The Bank of England’s April 2010 Trends in Lending publication and its Credit Conditions Survey for the first quarter of this year indicate that bank lending to larger businesses is increasing and the cost of borrowing falling. This is corroborated by the Association of Corporate Treasurers’ spokesman Martin O’Donovan who says that bigger company credit spreads have fallen and well-rated businesses have been tapping the bond markets successfully for some time now.

However for SMEs the reverse is true. Demand and the cost of borrowing are both increasing while terms are tightening. This is worrying for small businesses because it may inhibit their ability to grow and it was listed among the major concerns of business owners in Baker Tilly’s Owner Managed Business Report published last month.

Across the corporate finance scene as a whole, deals are being done. Researchers Dealogic point out that globally mergers and acquisitions have risen by 15% as compared to first quarter last year. In Europe transactions are being announced although much reduced in number and value as compared to 2006, 2007 and the first part of 2008.

Locally, corporate finance adviser Charles Whelan of HW Corporate Finance says: “We saw a pick up in deals in the first quarter. There is a realisation that we are not going to go back to the heady days of 2007 in terms of pricing and business owners are realising that life has to go on.” He points out that uncertainty surrounding the election has not helped in getting deals done and also there is genuine concern among some entrepreneurs about a potential rise in capital gains tax.

Management buyouts have staged a modest recovery, according to Nottingham University’s Centre for Management Buy-out Research, although secondary and even tertiary buyouts dominate the activity. This suggests private equity and bank funders are merely trading extant deals between themselves rather than putting new money into new buyouts. Christiian Marriott, a director of Barclays Private Equity, comments with some caution: “The strong start to the year ... may not necessarily signal a sustained resurgence in the UK buyout market, rather a more gradual recovery over the next few years as confidence returns.” A widely held view is that private equity houses are flush with cash raised for investment in 2006 and 2007 but are either not yet sufficiently confident to invest or unable to raise the leverage that they need to fully fund new deals.

There is some positive news from the banks themselves however. “There were not many [merger and acquisitions] transactions last year though we saw quite a few refinancings,” explains Mark Frettingham, HSBC’s head of corporate banking at the bank’s South Corporate Banking Centre. “Now most of those have been done and we are seeing more buoyancy on the M&A side .... We are seeing more players coming back into the market as confidence and optimism improves.” He says that vendors are less inclined to hang on to get top pricing for their businesses and that transactions are happening where there is a compelling imperative for them to do so. He does however sound a note of caution over those businesses that are dependent on public sector contracts where the outlook may be uncertain.

At Lloyds Banking Group, Andrew Fish, corporate finance director for the Thames Valley and the south east, says that although credit decisions on transactions are taking longer to come through, loans are now beginning to be made against cashflow. This is in contrast to the secured lending that many banks have insisted on since the financial crisis. “What I’m finding is that well-managed businesses have managed to maintain their profitability throughout the downturn and are now pretty well placed .... If they have managed to maintain their profitability and cashflow over the past three years then we can have confidence that they can carry on over the next three or four years.”

In late April Lloyds announced that it had provided a £4 million loan facility to AIM-listed Alliance Pharma to assist the firm growing organically and through acquiring additional product lines. But while doing such deals Fish says post- election uncertainty and the sovereign debt concerns could still knock business confidence.

For smaller firms the going is particularly hard. Adrian Alexander, Mazar LLP’s corporate finance partner, notes that bank lending usually has to be secured and leverage ratios have fallen. Banks, he says, won’t look at buyouts at the moment. “As far as M&A is concerned there are more buyers than sellers but strategic trade buyers with cash to spend are in a strong position.” He says that despite the recession there are fewer distressed businesses for sale than expected.

Alexander’s colleague Andrew Baxendine who covers the south coast including Southampton, Poole and whose territory stretches as far as Bristol reiterates that secured lending is certainly the flavour of the month. Generally lenders are looking for long-term contracts in industries such as property maintenance, the health sector and environmental testing, where cashflow looks certain for several years ahead. Businesses that tender for one-off contracts, healthy and well run though they may be, are finding it very tough to raise funding from banks. On the whole acquisitions have been small and few and far between but he emphasises that he frequently comes across well-managed businesses that are doing well despite the difficult trading conditions of the past couple of years. “On the whole the business climate is not too bad in our area”, he concludes.

All in all corporate finance in the region is emerging from a period in the doldrums. The larger, more creditworthy businesses are finding it easier to raise funding and buy businesses but for SMEs it is much more difficult. Banks and advisers are reasonably positive in their outlook but uncertainty over what the new government might bring and how business will be affected suggests that transactions are unlikely to pick up significantly until 2011.

THE BUSINESS MAGAZINE – THAMES VALLEY – JUNE 2010

Exporting our way out of recession

Filed in: trade, recession, export, cbi, overseas

It sounds like a plan. Seize the moment while sterling is weak and boost income to the nation’s coers, in this, our hour of need. But it takes more than ␣ne Churchillian sentiments to sell goods abroad, writes Richard Willsher

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Exporting our way out of recession

It sounds like a plan. Seize the moment while sterling is weak and boost income to the nation’s coers, in this, our hour of need. But it takes more than ␣ne Churchillian sentiments to sell goods abroad, writes Richard Willsher

The plan itself was set out in the third report from the Business, Innovation and Skills Parliamentary Committee published on January 12 entitled “Exporting out of recession.”This resulted from the Committee’s enquiry begun in February 2009. One of the highlights of the enquiry was the submission of Lord Jones, formerly leader of the Confederation of BritishIndustry(CBI). Hesaid:“I will tell you that the only way this country is going to get out quickly is to trade its way out of it. If Britain was a company I would be saying, ‘The fundamentals are okay, you’re not going to go bust, but this is going to be bloody’.”

The report’s recommendations listed 22 dierent areas and initiatives from the public sector that together would create an “export culture”. Among these, UK Trade and Investment and the Foreign and Commonwealth Office were praised for their work but the gist of it was that they and other areas of government could do more.

But even if all the suggested initiatives were to be put into action they wouldn’t bear export fruit overnight. And it is worth remembering that though the pound remained weak for much of 2009, the huge trade in goods de␣cit in November of £6.8 billion had worsened to £7.3bby the end of the year. Things had not it seems improved much by early February when David Kern of the British Chambers of Commerce was quoted in London’s Evening Standard as saying: “Given the favourable international environment for British exporters, with a competitive sterling exchange rate and global growth edging up, our overall trading performance is not strong enough…”

There have been some causes for optimism however. The ␣rst is that sterling has weakened further. As of March 8, it stood at 1.50 to the dollar and at 1.10 against the euro. A month earlier a survey from the CBI revealed: “Small and medium- sized manufacturers are starting to bene␣t from the relative weakness of sterling, with overseas orders stabilising after seven quarters of decline ...”

Further, a European Business Trends report compiled by BDO LLP found: “The weak pound has fuelled the UK’s export market to such an extent that British exporters are more con␣dent about future export growth than their counterparts in the Eurozone ...”

However as exporters have been telling us in the course of compiling this international trade feature, one weak currency doth not an export recovery make.

Many companies with overseas sales also have to shoulder increased input costs, for example from buying components or raw materials priced in dollars. The second issue is that if they are pricing their goods in sterling it is not easy to simply hike prices. Our largest trading partners, the EU in particular, have problems of their own to wrestle with. Invoicing in euros or dollars is more bene␣cial as it disguises the currency gains made by exporters when they translate those currencies into pounds. But as exporters will tell you, it’s swings and roundabouts. Over time margins can be richer or tighter, you have to go with the ␣ow to an extent and maintain reasonably stable prices in overseas markets.

A key misunderstanding is that exporting to the BRICs and other emerging markets is the great panacea. In fact UK exports to Brazil, Russia, India and China, though they are growing fast, do not account for much of the total. In the region of 75% of UK exports are sold to Europe and North America. That leaves a relatively small proportion to the rest of the world.

Another consideration is the fact that battered businesses need to recover their own balance sheets. As the BBC’s economics editor Stephanie Flanders points out in her “Stephanomics” blog of February 23, exporters are likely to be more inclined to earn fatter margins when they can rather than cut prices to boost sales. That makes good, more pro␣table, business sense.

Looking into the future, the big question mark hanging over UK trade is what will happen after the election. Though shadow chancellor George Osborne mentioned “exports” three times in his February 24, Mais Lecture at London’s Cass Business School there was no substance or detail. “We have to move to a new model of economic growth that is rooted in more investment, more savings and higher exports,” he said, but this sounds more like the starter to an A-level economics question than a policy statement.

What is clear from speaking to exporters is that instead of bluster and vague political statements, exporting our way out of recession is all about real companies selling real goods and working the hard yards to their overseas customers’ doors. That is what our export success stories demonstrate. Yes the weakness of sterling is helpful but it is by no means the whole story.

THE BUSINESS MAGAZINE – THAMES VALLEY – APRIL 2010

International trade case studies

Filed in: it, recession, business, medical, research, digital, transcribe, healthcare

Case studies of companies in the South-east of England that are achieving success in overseas markets

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Small market enjoys global potential

Scientifica manufactures a specialised product that is arguably the best of its kind in the world. Consequently, although its market is niche, it is also global, writes Richard Willsher.

Its equipment is used in electrophysiology – the study of the electrical properties of cells and tissues. It measures minute changes in voltage or electrical current. This is of vital interest to medics and researchers working in neurosciences and investigating diseases such as Parkinson’s and Alzheimer’s or seeking to understand the functioning and processes of memory. But the measurements are exceptionally precise. The company’s equipment can direct a probe into a cell to an accuracy that is on the scale of 1/5,000th of the width of a human hair.

The company, with research, development and manufacturing operations in Maidenhead and headquartered in Uck␣eld, east Sussex, began manufacturing
its own equipment 10 years ago. Over the next several years it developed a customer base among the top universities and research establishments throughout the UK but took its time before entering the international marketplace.

“We wanted to make sure our market in the UK was stable and the products that we were designing and producing ourselves were long-term reliable,” explains Mark Johnson, Scienti␣ca’s joint managing director and co-founder. “That way we could ensure that we could sell them into distant markets and be con␣dent that we could provide the technical support and back up.”

But because scientists and medics from dierent countries are investigating similar problems, the demand among them for such equipment was bound to be pretty much the same.

“Researchers face the same challenges wherever they are in the world,”says Johnson. “We have designed our products with focused help from our customer base. We really involve our customers to produce equipment that is as near perfect to meet their needs as we can make it. Also being relatively new boys on the block as compared to some of our competitors, we’ve been able to see what they’ve done and learn from them.”

Therefore Scienti␣ca understands its market very well and also pays particular attention to the excellence of its equipment and the uniqueness of its capabilities. “Our market may be 100,000 people worldwide. This is quite small but because of this we can identify our potential customers quite easily. And because they often collaborate and are a very close community of people, if you do a goodjob–andwedoagreatjob– they recommend our products to their friends and colleagues in their own countries and in others,” he continues.

His company now exports 40% of its £4 million of annual sales. Last year turnover grew by 30% and Johnson expects that overseas sales will soon exceed those in the UK. While he is currently focusing on selling into USA, Canada, Japan, China and Australia, Scienti␣ca’s products have already found buyers in Belgium, France, Germany, Israel, Italy, the Netherlands, Portugal, Russia, Scandinavia and Spain.

Scienti␣ca has established itself as the supplier of choice to the world’s neuroscience research community, which is a considerable achievement. It has also demonstrated how a niche product can ␣nd a global market, provided it reaches a thorough understanding of its customers’ needs and aims with scienti␣c accuracy to meet those needs precisely.

Details: Scienti␣ca 01825-749933 www.scienti␣ca.uk.com

Digital efficiency grows worldwide
Post recession, many organisations around the world are cutting cost by being more efficient in the way they handle information. A Pangbourne- based business is helping them to do just that.

Winscribe provides Windows- based software for digital dictation, transcription, voice recognition and work␣ow management. The company is typical of many Thames Valley businesses. Its parent company is based elsewhere – in New Zealand in Winscribe’s case – but it handles its company’s sales to markets in Europe, the Middle East and North Africa (EMENA).

“The thing that sets us apart is the intelligent work␣ow,” explains Philip Vian, the company’s CEO for EMENA. “That’s what our software manages. When, say, a doctor dictates a patient’s notes, it’s what we do with the voice ␣le once he’s recorded it. Our system ensures that the voice ␣le is sent to the right transcription team, perhaps with the patient’s x-ray or other patient data, so that it needs the minimum amount of additional work and can be handled swiftly.”

The Winscribe system is used across a variety of dierent types of organisations in both private and public sectors. Healthcare is one, but also legal services, the police and law enforcement and various government departments. In addition to transmission of digital data, Winscribe has developed several speci␣c technical vocabularies so that it can apply voice recognition to the voice recording. This means that the recording is already transcribed enabling a secretary or assistant to merely edit it. This again increases efficiency.

The company has translated its software into French, Dutch, German, Polish and Spanish and has made inroads into those markets. But its big push at the moment is into the Middle East. It has also prepared an Arabic version, which is ␣nding many uses in the region, particularly in the healthcare sector.

“The Middle East is an emerging and very buoyant market for us,” says Vian, “because of the amount of money that most of the Gulf countries are now spending on healthcare. One of the best ways to improve healthcare is to reduce the document turnaround times so that the patients are seen much quicker by the next specialist or they are discharged much quicker.” He notes that “healthcare tourism” is now a booming business in some Middle Eastern countries
as an increasing number of patients from Europe and from Asian countries travel there for treatment. The company’s sales in the region have grown 30% year- on-year.

More than 350,000 people now use the Winscribe system worldwide and this is growing by leaps and bounds as whole organisations embrace more efficient ways to handle their data. In particular organisations emerging from recession are keen to become more efficient without adding sta to their payrolls. Vian says that in this way Winscribe is benefiting from the post-recessionary backwash and the business looks set to grow exponentially as organisations around the world see their peers and competitors becoming more efficient and buying Winscribe’s products in order to keep up with them.

Details: 0118-9842133 sales@winscribe.com
www.winscribe.com

THE BUSINESS MAGAZINE – THAMES VALLEY – APRIL 2010

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