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Reading Time | < 1 min 02 Feb 2016

Buyout activity for SMEs at 5 year high

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Investment for SMEs is at its highest level for 5 years, according to research from Lyceum Capital and Cass Business School.

Based on private equity investments in 2015 with an enterprise value between £10 million and £100 million, the analysis shows that volume transactions increased by 12% last year, with 87 investments totalling £3.43bn.

Total deal volumes remained between 30%-40% but investments are expected to continue in 2016 with investors focusing on SMEs with perceived earning quality and a good potential for growth.

Investment activity was highest during the second half of 2015. The value of acquisitions in the £25-75 million range grew by 52% to £2bn, indicating an improvement of investor confidence for established SMEs.

The business services and industrial sectors also saw investment increase by 84% and 66% respectively, while the healthcare sector showed a 33% decrease in 2015.

Andrew Aylwin, partner at Lyceum Capital, said:

“In a global economic market plagued with uncertainties ranging from falling commodity prices to volatility in the Far East, it is encouraging to see that the outlook for entrepreneurs and medium sized companies has never looked stronger. 

“We expect these businesses to continue to attract increased amounts of investment and grow into industry champions over the next 12 months.”

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Reading Time | 2 mins 01 Feb 2016

Insolvencies continued to fall in 2015

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The number of people being declared insolvent was at its lowest level for a decade, according to the Insolvency Service show.

A total of 79,965 individual insolvencies were reported in 2015, a 19% decrease compared to 2014 and the lowest since 2005.

3,495 companies entered insolvency in the last quarter of 2015, 2.7% less than Q3 2015 and over 10% less than Q4 2014.

Personal insolvencies

The continued fall in individual insolvencies was mainly driven by a decrease in individual voluntary arrangements (IVAs). 

33,993 IVAs were reported in 2015, a 23% decrease from 2014.

The number of bankruptcies was the lowest since 1990 with a total of 15,767 bankruptcy orders in 2015, 22% lower than in 2014.

The number of debt relief orders decreased by 9% to 24,175.

Phillip Sykes, president of the insolvency professionals trade body R3 commented on the latest statistics:

“Continuing low inflation and a growing economy have helped people pay down or service debts. The return of real wage growth has put a big dent in insolvency numbers.

“Quarterly insolvency numbers have been boosted by October changes to debt relief orders, which have made the insolvency regime more accessible to people in financial trouble.”

Business insolvencies

Compulsory liquidations decreased to the lowest level since 1989 with 583 companies subjected to a compulsory winding-up order in Q4 2015.

2,484 businesses entered creditors voluntary liquidation in Q4 2015, a 1.2% decrease on the previous quarter and 3.0% lower compared to the same period in 2014.

350 businesses filed for administrations in 2015, while the liquidation rate in the 12 months ending to Q4 2015 was 0.44% of all active companies.

 Mr Sykes said:

“The falling price of a barrel of oil has helped businesses to bring costs down. However, it is causing a considerable degree of difficulty for those in the sector.

“While many oil and gas businesses are currently undergoing a period of restructuring, if they are unable to cut costs sufficiently we may see a wave of insolvencies in the sector in future quarters particularly among the smaller firms.”

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Reading Time | < 1 min 29 Jan 2016

Self-employed not paying into pensions

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Only 17% of self-employed people are saving into a pension, according to the Office for National Statistics (ONS).

A report by Citizens Advice has found that the self-employed consider investing their money into a savings account, cash ISA or property a better option.

Based on a survey of 650 people, 3 key issues are preventing the wider adoption of pension saving by the self-employed:

  • lack of understanding – 67% do not understand the tax breaks with 25% wrongly thinking that an ISA offers better tax breaks than a pension
  • lack of trust – 50% do not trust pensions as a safe place to invest their money
  • lack of information – 27% have never received any information or advice about pensions.

Since 2001, self-employment has increased by 32% to 4.5 million. However, the number of self-employed people paying into a pension has halved, falling from 1.1 million in 2001/02 to 450,000 in 2013/14.

Gillian Guy, chief executive of Citizens Advice, said:

“A lack of information and understanding on how paying into a pension can provide an income in retirement means self-employed people are turning to other options to fund their future, with many people not saving enough.  

“While property or cash savings may be viable options, people could also benefit from being in a pension scheme.

“It is really important that self-employed people are offered up front information about how pensions can work for them so they can make an informed choice as to the best retirement savings plan.” 

Talk to us today to discuss about retirement planning.

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Reading Time | < 1 min 28 Jan 2016

Businesses underestimating risks of cyber crime

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More than a third of businesses have fallen victim of cyber crime such as hacking, phishing and pharming.

However, according to research by Aviva, 2 in 5 (44%) business owners don’t believe they are likely to be victims of cyber crime, whilst a quarter (23%) admitted to not knowing what to do to protect themselves from cyber crime.

24% of the businesses surveyed are currently taking steps to protect themselves from cyber crime. 

When asked about the different types of cyber crime, phishing was ranked highest at 77% followed by identity theft (69%) and hacking (66%). 

43% were aware of ransom demands being made to them by criminals to access their information. Businesses were also aware of pharming (46%) and cyber attacks (38%) that prevent access to their internal systems.

When asked if they knew what to do if they faced up against cyber crime, more than a third of business owners (34%) admitted they don’t know, while 27% were not sure.

Angus Eaton, MD of commercial lines at Aviva, said:

“Protecting your business from cyber crime is good business because your customers want the reassurance that their data is safe in your hands. If you haven’t done so already now is the time to put cyber risk on your agenda and take action to help prevent your business becoming a target.”

Talk to us today to discuss about protecting your business.

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Reading Time | 2 mins 27 Jan 2016

Money worries impact workforce productivity

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1 in 8 (13%) workers say that money worries have affected their productivity in the workplace.

The number of workers reporting financial difficulties has doubled over the last 10 years, according to a report by the Social Market Foundation (SMF). The report analyses data from both the Understanding Society study of over 40,000 households and the British Household Panel survey. 

The report also found that:

  • 4 in 10 workers (40%) say money worries have made them feel stressed over the last year
  • 24% of workers say they are “just about” managing their finances
  • 25% say they have lost sleep over money worries
  • 48% are not putting any money aside for anything more than regular bills.

Katie Evans, SMF economist and report author, said:

“This low financial resilience is a problem across industries – and it’s getting worse. The proportion of workers reporting that they face financial difficulties nearly doubled over the decade to 2013/14.

“These money worries have a clear impact on how people feel and behave as they go about their day-to-day lives and jobs.”

Monica Kalia, co-founder of employee benefits provider Neyber, commented:

“The fact that these issues are apparent across all sectors of the economy means that we have consistently failed to recognise some of the key drivers of poor productivity in the UK economy.”

The report has found that workers in well-paid industries are also having financial difficulties. The SMF has suggested some solutions to tackle the problem:

“Workplace pensions have already been introduced to build financial resilience later in life. One option is to extend auto-enrolment policies to include short-term savings or income protection insurance as well as pension savings.

“New financial mutuals, providing affordable savings and credit products using bonds of trust between those in particular professions, could be one way of building a culture of financial resilience through the workplace.”

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Reading Time | < 1 min 26 Jan 2016

Public sector borrowing drops

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Public sector borrowing, excluding public sector banks, closed 2015 £4.3 billion lower than in December 2014.

In the current financial year to date (April 2015 to December 2015), public sector net borrowing was £11 billion compared with the same period in 2014, according to the Office for National Statistics (ONS).

Public sector net debt at the end of December 2015 was £1,542.6 billion, equivalent to 81% of GDP.

David Kern, chief economist at the British Chambers of Commerce, said:

“After November’s setback, the marked improvement in December makes it likely that public finances will show an overall improvement in the current financial year.

“There is still no room for complacency, and the task ahead remains huge. The weaker financial sector and depleted oil and gas output mean that the UK’s ability to generate tax receipts has experienced a long-term decline, and we must adjust our public spending plans to this reality and do more to boost our tax base.”

Ross Campbell, ICAEW director for public sector policy, commented:

“While public sector borrowing looks in better shape than where we were last year, there are still questions about whether the government can achieve a surplus of £10.1 billion in 2019-20.

“Getting the best outcomes for the public finances in challenging times means being supported by modern financial management. “

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Reading Time | < 1 min 25 Jan 2016

Millennials saving more than 35-55 year olds

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The millennial generation – those who have reached adulthood in the year 2000s (18-34 years old), have twice the amount of money and half the debt as those aged 35-55. 

According to a report by Experian, 45% of 18-34 year olds save a least a quarter of their disposable income each month, compared to 34% of 35-55 year olds.

Millennials who think that their parents positive influence on their financial attitude and habits save twice as much when compared to those who believe their parents had a negative influence.

Those who have benefitted from their parent’s financial experiences are more prepared when it comes to managing credit in particular. 

Millennials whose parents had a negative effect on their money management are:

  • twice as likely to have missed an agreed credit payment 
  • more likely to have gone into an unplanned overdraft
  • twice as likely to have run out of money before payday
  • twice as likely to have been refused credit
  • twice as likely to have defaulted on a credit account
  • 5 times more likely to have a count court judgement in their name.

Clive Lawson, managing director at Experian, said:

“As it stands, it appears that Millennials already surpass older generations when it comes to money management and this is good to see; however, there are still a few lessons to be learnt. 

“Many are still making crucial errors in the way the manage credit and these mistakes, such as not even checking their own credit report can have far-reaching effects on their financial future.”

Contact us today to find out more about money management.

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Reading Time | 2 mins 25 Jan 2016

Wage growth slowed down in late 2015

Reading Time • 2 minsWage growth has slowed down while unemployment has fallen to 5.1%, the lowest on record.
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Reading Time | 2 mins 22 Jan 2016

Time-poor workers find work/life balance problematic

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A Scottish Widows report has found that people find it difficult to maintain a healthy work/life balance in the face of long working days and significant commutes.

53% of younger workers aged 18-24 year olds feel that their lives are currently skewed towards work.

Employees

Working hours appear to be a contributing factor as the report suggests that employees spend more than 10 hours each day at work (or getting to and from it) while spending less than 3 hours a day with their loved ones.

Parents of children under the age of 18 are especially concerned about their failure to achieve a healthy balance between work and family. 

Some of their concerns were:

  • 51% of parents feel they are missing out on seeing their children grow up
  • 41% say that work commitments force them to let their family down on planned activities
  • 48% state they don’t have time to prepare or eat meals with their family.

Employers

Employees are looking to their employers to do more to help them achieve a better work/life balance. 

60% of workers want to see their employers offer flexible working hours, while 47% want the flexibility to work from home.

The report also found:

  • 21% of employees would accept lower pay if they were able to work fewer hours
  • 58% of employers would offer employees the same level of support, regardless of family circumstances
  • 26% of employees said that their employer offers them the level of support.

There is a growing understanding among businesses that technology and flexible working patterns can help achieve greater productivity and efficiencies in the workplace while also allowing employees to achieve a better balance between work and their personal life.

With this in mind, the business standards company (BSI) has announced a The Smart Working Code of Practice which aims to create modern workplaces that support more flexibility and collaboration to give employees a better work/life balance.

The code of practice is intended for use by organisations of all sizes and in all sectors.

Scott Steedman, director of standards at BSI, said:

“Smart working is about harnessing the potential of flexible working in a strategic way, to deliver benefits both for the business and for employees. 

“Employing effective practices is a key goal for all businesses, and smart working is not restricted to one sector, it is applicable to all businesses regardless of size or sector.”

Contact us today to discuss about your employees.

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