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Property Division - 'How We Work'
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How We Work
INTRODUCTION
We have written this introductory booklet to help our clients, potential clients and indeed their advisors to understand how we work. This booklet will have succeeded if we all have a better understanding of what to expect from each other. It is free to anyone who wants a copy.
Our core business is to help companies secure the funding they need to achieve their growth objectives. We can help when a business requires rebanking advice or secured borrowing. We are experienced in looking at alternative corporate and funding structures and assisting companies in handling the whole funding process to Heads of Agreement stage, prior to the involvement of specialist lawyers whose role is to express an agreed deal in appropriate documentation to satisfy the requirements of our client and the finance providers concerned. We offer a comprehensive range of services and advice to unquoted companies, delivered by experienced and qualified professional staff working to high standards of ethics and integrity. Much of our business involves deals in the £1million to £10 million range, although every deal is different and some do fall out of this bracket.
Our Finance Provider is not our client, we only act for investee companies – the companies and entrepreneurs looking for funding. We do, however, know a number of our Finance Providers extremely well – what they like, what they don’t like, how they prefer to work etc – and this can be most useful for our clients in helping to "oil the wheels". At no time though, can we make any guarantees that we will be successful – it is not our money and we do not have the power of chequebook.
THE FIRST STEPS
We would like to see a business/ project plan. We are not looking for a work of art, but enough information to give us a preliminary feel for the type of business/ deal, whether it is likely to be suitable for Finance Providers, and the background of the people involved.
Remember that the fund-raising exercise should be carefully planned (unless you need emergency finance) and the fact that some thought has gone into a plan does give us comfort that our prospective clients are approaching the task in the right way. You can send the plan, or a summary, to any of us in the firm, or to our office in London (see our website and brochure for contact details). We are happy to sign a non-disclosure agreement ("NDA") first if required.
THE FIRST MEETING
If, on reading the plan, we do not think we can help, we will tell you right away; we will also try to explain why. This might be because we do not have enough Finance Providers keen on the type of project, or some areas of the project plan make it unworkable. In this case we will either return the plan to you at your request, or securely destroy it.
If we think we might be able to help, we will then select the appropriate associate to work with you. They will look to meet with you and this first meeting is an important one for us both, since from this we will decide what to do next. Potential clients of the firm need therefore to prepare for this meeting, held at a mutually acceptable venue. We will quiz potential clients on the proposal and will seek answers to the key aspects of the proposal that our Finance Providers are looking for, i.e.
• Can the management team demonstrate that it has the ability to turn investment into profit? Is there anything in their track record that supports this?
• What is the "discriminator" in your business? What makes your company different from its competitors and therefore more likely to succeed? Perhaps patent protections, proprietary information or other factors that will give comfort to investors that you are "special".
• What is the potential exit route, when and where is it?
• How much is really needed, when and why? Can funding be phased?
• What is the deal? How much equity/ return are you prepared to offer? How did you arrive at the figure?
• Are there any time or other constraints (apart from "as soon as possible" – everyone seems to come to us too late!) or other factors that we need to be aware of?
We will also want to look at other funding avenues. About a third of us in the firm are bankers, and if we can find a way of raising the finance and reduce the cost of the borrowing/ reduce the equity on offer, we will recommend that you do so.
It may be that the business plan, however carefully prepared, does not bring out the issues that a potential Finance Provider will want to see – e.g. what is the deal for them. The review, and where necessary, guidance on the structure of your plan is part of our service to you.
WHAT FINANCE PROVIDERS WANT
In deciding whether or not we can help, our first concern is deciding if the proposal is likely to be attractive to Finance Providers. That is what matters. At the risk of stating the obvious, Finance Providers will want to make a profit out of their investment. This means that, at a minimum, they will want to see the value of their investment double over, say, three years. They will want to see an exit route – no-one wants to be locked into a deal forever, so there needs to be a clear exit strategy. This can be through a sale (who are the target buyers?) or a sale back to the management if cash flow permits or perhaps a refinance (evidence of the feasibility of this must be provided).
AFTER THE MEETING
If we think we can help, we will send you a formal Letter of Engagement for you to sign and return. We can do nothing else until this has been done.
We then work with you to ensure that we understand your proposal sufficiently, and that the business plan is in a form that will be attractive to investors. The timescale for this is largely in your hands. We will need to know who your lawyers are so that we can send our Terms agreement across to them as well.
MARKETING THE CLIENT
Our job is to ensure that our clients’ proposals are presented in the right way to as many suitable Finance Providers as possible, and we employ a variety of channels to achieve that end.
Our most effective means of bringing you in front of our investors has always been through personal contact. Our Associates know the more active Finance Providers, and deal with them on a wide variety of matters. So they will contact them as soon as they see a proposal that is likely to interest them. It is this knowledge of our more active investors that is the real strength of the firm. Often we will also prepare a 2/3 page synopsis – approved and warranted by our client - which we circulate to targeted Finance Providers. Our Associates have knowledge of their requirements and interests and will target the appropriate ones. This may be to 10 Finance Providers or 100, depending on the nature of the proposal.
Finally we will prepare a short paragraph for our regular Stop Press. This is up to 200 words, will not name our clients, but invite interested Finance Providers to seek further information from your Beer Property Finance Associate. Our client will approve the entry in advance, and will warrant information given. Circulation of the Stop Press is well over 2,000 and growing, and will include all our private investors, the VC Institutions and a large number of our other contacts, such as stockbrokers, private banks, accountants, solicitors - indeed anyone we know who has access to Finance. Given the range of circulation, we cannot realistically control who will read the entry and we need to be careful not to disclose confidential or sensitive information, but provide enough to make our investors want to know more. The American phrase is the "elevator pitch".
FINANCE PROVIDER MEETINGS
If a Finance Provider wants to meet our client, he will need the up to date business/ project plan in advance of the meeting. We will attend most meetings with each Finance Providers, to ensure that things run as smoothly as possible.
We will help with the process where necessary with a view to achieving a firm offer of Finance. Our Finance Providers may have strict criteria/ process that they work to. They may require many meetings or just the one to help assess the deal.
THE PROCESS
We have a role in the due diligence stage. We do need to make sure that our clients are providing additional information promptly and accurately. We will also advise our client on any formal or informal offers that the Finance Provider might make, to ensure that all the key issues have been agreed, or at least discussed.
When the time comes to appoint solicitors, we can recommend suitable firms if our client does not have one of his own.
After this, we are on hand should problems arise – it is in our own interests after all that they do not! Whilst most of our Finance Providers are well known to us, some are not. Our clients should therefore undertake their own due diligence. We will advise as needed.
DISCLAIMER
This leaflet is based on information currently available, and is intended only as a general guide. Our approach to each investment proposal or client will in practice vary in accordance with the particular circumstances. No liability can be accepted by Beer Property Finance Ltd for any action taken or not taken as a result of the information contained herein. Any statements or views are the firm’s personal views and no reliance should be placed on any such statements or views.