In this edition, meet our new head of finance and exit partner Tom Wotton. Tom is a Chartered accountant, Chartered Tax Adviser and former principal of a successful Yorkshire-based accountancy practice. He also has a wealth of experience steering business owners through the exit process.
As Tom says: “In recent years I have gained a lot of experience guiding clients through the emotional rollercoaster of selling their business. This included financial services sector businesses and the specific intricacies that come with them.
“I’m known for providing easy-to-understand, pragmatic guidance to clients and take enormous pleasure in finding solutions to challenges that come with the territory of running and exiting a successful business.”
What attracted you to join the team at TEP?
“Simply put, TEP seeks to achieve the best outcome at every turn, irrespective of what that may look like.
“The team is dynamic, ambitious, highly skilled and experienced in the M&A space. Crucially for me, they also have a very caring and collaborative ethos towards all stakeholders, staff, business partners and, of course, clients.
“These values align very strongly with those I have developed during my career – I’ve hugely enjoyed building long-term connections which extend far beyond the usual adviser-client relationship. These relationships become so much stronger during the sales process as the seller goes through a wide range of emotions which they’ll never have experienced before.
“I know that the team at TEP have stood in the seller’s shoes and got the T-shirt (plus the odd scar!) to show for it, and I’m relishing working collaboratively with them to help clients navigate these challenges with confidence and clarity.“
What influence will your expertise have on shaping the proposition for TEP clients?
“I believe my skillset will complement the incredibly experienced financial planning backgrounds of my colleagues and broaden the expertise that TEP clients can lean on during the sales process. Coming from a different professional services sector, but one which works hand in hand with IFAs, I like to think that my accountancy and tax background strengthens an already super team.”
What do you see as the biggest challenges in the M&A space today and how do you plan to tackle them at TEP?
“Over the years I’ve watched with interest as valuations attached to financial planning firms increased and private equity flooded the space.
“Just a couple of years ago it was easy to sell a business. A lot of demand due to the influx of private equity and cheap debt created a sellers’ market, and prices, in my view, were too high. Interest rates have risen considerably and Consumer Duty has had a huge impact on integration strategies for businesses; now buyers are a lot more selective.
“Here at TEP, in a competitive market, it’s our role to make our firms stand out! We understand the regulatory regime and the acquisition landscape so we can present our sellers in the best way. We prep them, package them, and present them. This instils confidence in the sellers, and buyers know a TEP firm is a motivated seller, who has committed to the process and has their finger on the pulse.“
Can you describe a project or deal you’re particularly proud of and what made it successful?
“In my former role as a principal in a successful accountancy practice, we were engaged by a business owner looking to sell his business. He came to us as the sale was outside of the comfort zone of his existing adviser.
“Unfortunately, heads of terms had already been signed prior to us being engaged. The terms initially required the client to extract dividends from a connected company to repay debt in the target company; in doing so he would incur a substantial personal tax liability. Nevertheless, I was able to negotiate with the buyer, restructuring the deal so this dividend extraction would not be required. This significantly reduced the personal tax burden on our client compared to the original requirements while not impacting the buyer in any way – a genuine “win-win” scenario.
“As well as being able to provide a solution which made the financial outcome of the deal much better for the client, I took enormous pleasure guiding him through the process so there were no surprises, even when other matters didn’t go to plan.”
How do you handle negotiations and conflict?
“At TEP, we pride ourselves in shielding clients from conflicts as far as possible, taking on this burden on their behalf. This way, the dispute can be managed more dispassionately and sellers can protect their fledgling relationships with the buyer – let’s remember, post-sale it is highly probable that our seller will be working together with the acquirer.
“This is not to say that we are unwieldy rottweilers seeking to enflame a situation; negotiations are all about striking a balance of equality. In our capacity as advisers, it is critical that we really understand our client’s objectives and red flag areas but, equally, that we understand the buyers’ perspective. It is only by doing this that we can establish where the reasonable and fair “middle ground” lies, allowing conflicts to be overcome and for matters to progress positively.
“From how a firm is initially presented to the market, throughout the sales process and every single interaction with the buyer, we believe there is an art to negotiations.”
What three pieces of advice would you offer a seller?
Prepare yourself and the business for sale
“When the beach begins to call you, take the time to review the strengths and weaknesses of your business and “polish the apple” where needed.
“Every buyer will do this once you enter the market anyway and it’s much less stressful to do so when not under the scrutiny of a potential suitor. Similarly, take the time to consider what you want your new life to look like when you hand over the keys – I’ve seen many clients plan to retire, but not necessarily plan for retirement.”
Assemble your trusted team of advisers early before going to market
“Once you and the business are ready for sale, it’s important to assemble a team of advisers who you want to have in your corner. As you might expect, I’d advise you to look no further than TEP for your sale partner needs.
“I’d also recommend that you make contact with your accountant so that, from a tax-exposure perspective, you go into the process with your eyes wide open. As your journey along the sale path continues, legal representation can also be sought – IFA businesses are unique and it’s important to get a corporate solicitor who clearly understands the regulatory environment.”
Be patient and prepare to roll with the punches that might come your way
“While the two stages above will go a long way to making the sale process go a lot smoother, there will almost certainly be challenges that you’ll encounter for the first time along the way – a buyer may need to “pop the bonnet” on you and your business and understand everything about it – warts and all!
“Get ready to take some deep breaths, remain calm and take it all in your stride!”
Get in touch
If you’d like to understand how Tom and the rest of our team can support you in exiting your business, please get in touch. Email contact@theexitpartnership.co.uk or call 0113 4656 111.
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