Good Housekeeping Expedites A Rewarding Business Exit
Keep your company records up to date, advises Edward Evans, Partner at Beauchamps and a family business legal expert
Good housekeeping is essential for all businesses, not just in preparation for sale. Having proper business records and policies in place empower a business to demonstrate its value effectively when negotiating the sale price, and also ensures the vendor can effect a ‘clean break’ from the business.
The following are essential checklist items to ensure your company records are in order.
CONTRACTS
Ensure that your relationships with suppliers and customers are governed by an in-date contract that is signed by all parties, dated, and kept in a secure place. You should also create a schedule with the expiry and renewal dates listed. Any changes to the way you do business with a supplier or customer should be documented and kept with the original contract.
ASSETS
Carry out an audit of the company's assets including real estate, equipment and, most importantly intellectual property (IP). Very often (not least with family businesses) assets used by the company and thought to belong to the company belong to the shareholders, or even former shareholders. Ensure that the assets used by the company either belong to it or are used by it under a properly documented lease or licence.
Make sure your employment contracts are fit for purpose, up-to-date and comply with the law. Ensure you have contractual protections to help safeguard confidential information and IP of the business. This will help to protect the company’s goodwill and business interests.
Policies and procedures are key employment documents and provide a framework within which issues and problems can be resolved. Some
employment policies and procedures are mandated by statute or regulation and are compulsory whilst others are desirable from a best practice point of view but are at the discretion of the employer.
Compulsory policies include disciplinary procedures, grievance procedures (records of all complaints should be maintained), dignity at work procedures, equality/equal opportunities policy and a safety statement. In addition, businesses should now have a Covid-19 Response Plan.
It is also important to think about policies to help protect the reputation of the organisation in terms of social media, internet usage and whistleblowing.
If you have not already done so, you should carry out a data protection audit. Document what personal data you hold (does it contain sensitive personal data), where it came from, why was it originally gathered, how long will you retain it, how secure is it and who have you shared it with. You should identify and document the basis under law for your processing of personal data, and where appropriate, ensure you have appropriate data processing agreements in place. At a minimum, each business should have:
A data protection policy (which should include procedures for dealing with data breaches and data subject access requests)
A data retention policy
An employee privacy policy
A website privacy policy and cookies notice.
Additional policies/procedures may be required, depending on the nature of your business.
EMPLOYEES
DATA PROTECTION
STATUTORY BOOKS AND BANKING RECORDS
Every company is required to keep certain registers including:
Register of members Register of directors and secretaries Register of directors and secretaries’ interests Register of beneficial ownership.
In addition, companies should keep a record of board and shareholder meeting minutes. It is also good practice to compile all your banking records, including lease or hire purchase agreements, facility letters and mortgages or security documents.
Edward Evans is Corporate and Commercial Partner with Beauchamps T: +353 1 418 0970 E: e.evans@beauchamps.ie www.beauchamps.ie
Appian Mulls Impact Of Inflation Revival
Boutique asset manager Appian Asset Management in Dublin has c.€330m under management across six funds that generate €3.5m fee income annually. The firm says that risk management and downside protection is a cornerstone of its investment approach. The minimum initial investment is €25,000 and €10,000 thereafter, and clients span private clients, pension funds, endowments, charities and corporates.
Appian’s largest fund is the Multi Asset Fund, which has a current fund size of €177m and has delivered 10year annualised growth of 4.1%. Recent performance has been less impressive, down 8.6% year-to-date at end July, with the 3-year annualised growth coming in at 0.9%.
A feature of the MAF approach is that equities exposure is limited to 50% while Alternatives assets account for 36%. The fund’s top holdings are an Irish forestry unit trust (6.8%) and a stake in Appian’s property fund (5.4%). Among equities, Appian is keen on Draper Esprit, Novartis, CRH and Chile miner Antofagasta.
In a recent note to clients, the Appian investment team noted that market participants continue to be defensively positioned. “There hasn’t been any meaningful recovery rally yet, and when we see that it will benefit the economically sensitive stocks most, particularly as these were already valued at a large discount to defensive and technology stocks, and this gap has widened in the defensive rally.
“When we get a rally driven by the real expectation of an economic
Appian likes the prospects of Chile miner Antofagasta
recovery it could be significant, particularly for those stocks that haven’t fully participated in the rally to date.”
Appian also speculates whether massive monetary stimulus will revive inflation. Probably yes, is the tentative answer, in which case Appian recommends that investors should increase their portfolio exposure to cyclical equities, inflation-linked bonds, commodities, real estate and infrastructure. The Appian view is that asset classes that will struggle in an inflationary environment are growth equities, fixed income bonds and cash.
Huge Wealth Bet In The Tech Casino
In June 2019 we highlighted Zurich Life’s high risk Indexed Top Tech 100 fund, which at the time had run up in value by 25.6% since the start of the year. The fund is a channel into the
Invesco QQQ Exchange Traded Fund, which itself is linked to a very large US fund that invests in companies that make up the Nasdaq-100 Index.
A year ago, it might have seemed that US tech stocks couldn’t possibly go any higher. But they did. It turns out that the pandemic has been very good for Apple, Microsoft, Amazon, Facebook, Alphabet, Alphabet, Intel, Nvidia, Adobe Systems, PayPal and many others
Richard Temperley, Head of Investment Development at Zurich Life, notes that just five companies Apple, Microsoft, Amazon, Facebook and Google - now make up c.23% of the S&P 500 index’s total market capitalisation. “So far this concentration risk has benefited investors as these stocks helped to lift the overall market. In the short-term, further volatility in equity markets cannot be ruled out,” he adds.
In the main though, Irish funds are missing out on America’s tech mania. Year to date in mid-August the average Balanced fund had appreciated by 1.5% while the sector average for Cautiously Managed funds was minus 3.8%. In the same period, Indexed Top Tech 100, which has a fund size of just €99m, has delivered a pre-charges gain of 18.5%, and one-year appreciation of 31.0%.
In a depressed economy, American private investors and hedge funds are convinced that tech is a one-way bet, and so far the gamble is paying off.