With post-Brexit nerves still gripping many boardrooms, Platinum Business Magazine talks to Nik Askaroff, CEO of EMC, about the steps his company are taking to help businesses overcome their fears
July was a great month for EMC Corporate Finance. For the first time in many years, the South East-based firm completed on three major transactions – two large corporate sales through its Crawley and Hove offices and a significant share buy-back through its Eastbourne office – all within a few days of each other.
What made the month all the more special was the fact that each of the deals was completed in the wake of the Brexit vote that many predicted would herald a financial meltdown.
“I have to admit that we were slightly worried that things might fall over at the last minute following the referendum result, especially as one of the sales had an international dimension that made it somewhat more complicated,” EMC’s founder and chief executive Nik Askaroff admits. “But our experienced team were able to negotiate their way past some unexpected obstacles and get each of the deals across the line okay.
“Happily the sterling devaluation actually helped. And the good news has continued into August with the completion of a major sale to a German company.”
So have the harbingers of doom and gloom got it all wrong as far as Brexit is concerned?
“Not completely,” Nik says. “There’s no doubt that many businesses have been spooked by the decision to leave the EU. There’s bound to be some turbulence in the economy whilst the government formulates its negotiating position for a post-Brexit Britain.
“But as far as the mergers and acquisitions sector is concerned, particularly here in our corner of the South East that is dominated by owner-managed SMEs, I remain optimistic.”
He is encouraged in his view by a recent report from Private Equity firm Lyceum Capital and Cass Business School that showed continuing investor appetite for UK-based SMEs. Andrew Aylwin, partner at Lyceum Capital, was quoted as saying that the lower mid-market “is set to shine again as a beacon of attractive investment opportunities with the deepest pool of entrepreneurs and the strongest tech and digital economy hub in Europe.”
The continuing interest that PE firms are showing in SME investments is one reason for Nik’s optimism.
“Private Equity firms in the UK are sitting on huge piles of cash – some reports suggest upwards of £1 trillion – which they have to invest and use. It’s their jobs. The pressure on them to buy and invest in growing businesses won’t stop whatever the economy does.”
Nik also believes that many large companies currently holding sizeable cash reserves will also be tempted to splash some of it on strategic acquisitions.
“Larger companies recognise that real growth will need to come from acquisitions,” he says. “The recent EY Global confidence barometer showed strong deal sentiment across all sectors driven by volatility and disruption. Some sectors will need to be more granular, carefully identifying where and when to invest, but the only sector where acquisition appetite falls below 50% is in telecoms.
“With the opportunity cost of their cash in the bank rapidly approaching a negative yield, it makes sense for these larger companies to use it.”
Nik says that EMC has a strong pipeline of instructions that, even if they don’t all come to fruition, would still see the firm enjoy another terrific year following those that have seen it twice win the coveted Deal of the Year trophy at the Insider South East Dealmaker of the Year Awards and Nik himself being named Dealmaker of the Year in both 2015 and 2016.
It helps that EMC enjoys a unique position in the M&A marketplace as being both a corporate finance adviser and a provider of Board-level interim managers able to off er top-end supportto businesses on a retained or project-by-project basis.
It allows the firm to forge long-term relationships with the owners of businesses that often endure from formation through to their eventual exit.
A prime example of this was last year’s sale of Lewes-based Ivy Press to the Quarto Group Inc, the leading global illustrated book publisher.
EMC had first become involved with Ivy Press when the company started in 1996, initially assisting with the raising of working capital and then leading the finance department with Nik’s colleague, Michael Pay, becoming interim Finance Director. Over the years before the sale, EMC advised the company on a number of operational and strategic issues.
“This was a typical case in point where we were closely involved with a company from its start-up through to its sale.” Nik says. “We knew the business inside out which certainly helped us to engineer a most satisfactory outcome for the directors once they had decided the time was right for them to sell. It’s an added-value grooming service that others cannot offer.”
The success of the Ivy Press deal and others like it are particularly satisfying for Nik as they demonstrate perfectly what he set out to achieve when he set up EMC in Eastbourne in 1989.
“The country was just about to enter a recession that went on for a while and lots of people thought I was mad to be starting a business then,” he recalls. “However, I recognised that it was a time when plenty of companies might need extra help to survive, so for me it made perfect sense to leave the family business that I had been running for seven years to strike out on my own.
“I’d had a good grounding in accountancy with Grant Thornton before joining the family business so I knew I had something to offer business owners who may have been having a struggle to keep their heads above water.”
Nik was soon joined by several like-minded individuals who had tired of the corporate life but still wanted to use their knowledge and experience to help others.
By the mid ‘90s they had established a glowing reputation as corporate first aiders. It was around then that they were described in the FT as being the first corporate troubleshooters working as a team. They were dubbed the ‘mobile boardroom’ – a welcome moniker that has stuck to this day. Indeed, it was used as the title of their popular book of general business advice that was published last year by Thorogood Publishing.
The corporate finance arm was added in the late ‘90s completing what Nik always wanted to be a full service offering.
Today EMC operates out of offices in Hove, Maidstone, Chichester, Crawley, Eastbourne and London with 22 top-end consultants offering expertise across all the main business disciplines – finance, sales, marketing, strategic IT, production and operations.
“EMC is a lifestyle business. All our people have done high powered jobs in the City or internationally and still have something to give,” Nik says. “Some have made money and want to give something back; a number of them have moved out of London because they have families. Others just don’t want to retire. They could all earn more money working full-time elsewhere but really enjoy the different challenges that come their way through working with a variety of businesses of different sizes and across a range of sectors.”
So how are Nik and his EMC colleagues helping companies to overcome their post-Brexit nerves?
“It’s quite simple,” Nik says. “We are helping them to review their operations to see where they can work smarter and reviewing their business development plans to see how they can get in front of more customers. And then we are helping them to make sure their accounts function is productive and efficient.
“It’s not rocket science, but it’s amazing how many bosses don’t focus on these simple actions. If they don’t know how or don’t have the time, they shouldn’t be afraid to shout for help. By and large, businesses don’t fail because of the staff. They fail because the owners have failed to take action or summon help early enough.
“I’ve said it repeatedly over the 27 years that I’ve been running EMC but it still runs true today. Pay attention to the numbers, increase your activity and work smarter and you will reap the benefits. And if you can’t do it, find someone who can to help you before it’s too late and you see everything you have worked for over the years fall to pieces. Post-Brexit that risk is higher than ever.”
Somewhat mischievously he adds: “Of course, if people have already had enough and want out then they shouldn’t be put off by the EU referendum result. There will always be purchasers for well run businesses with a strong presence in their market.
“Even then, though, it’s important that they have advisers they can trust and who have the knowledge and expertise to see a deal through from beginning to end – someone prepared to be with them every step of the journey from when they first start to think about selling to the final signature being placed on the completion documents. Now I wonder who that could be….?”
EMC is headquartered at
Rochester House, Rochester Gardens,
Hove BN3 3AW.
Tel: 01273 945984.