I have brought these two
under the same heading as the required skillsets are similar; the same applies
where an organisation ends an outsourcing arrangement and brings the activity
back in-house. At an operational finance level, both scenarios require basic financial skills.
·
Interconnect Ltd had a turnover of £3.5m pa and
staff of 40 when I integrated it into Securicor Telecom with a turnover of £6m
and 75 staff (1994 prices). Subsequently another business with a turnover of
£1m and 20 staff was acquired and integrated. My involvement with this business
was as a start-up in the months following its commencement to trade and
subsequently a business integration with its sale to
Securicor.
·
Integrate
two downstream fuel distributors with an existing business unit for BP plc
(Commercial and Industrial Northern Europe division). This included a domestic
fuel distributor, a commercial fuel distributor and a fuel card operation with
a total turnover (1999 prices) of £350m.
·
Marconi
Optical Components and Bookham Technology plc both
had a turnover of £15m at acquisition and both had staffing of about 300 each
(2003 prices).
·
Real
Time Control (turnover £5m, staff 35) was acquired by DigiPos Group (turnover
£35m at 2003 prices). This particular business was originally part of Real Time
Control plc before its acquisition by NB plc (which has since been acquired by
British Telecom), from whom DigiPos made the purchase.
·
In
2005, Torex Retail (turnover £40m) acquired Anker
Systems (turnover £25m). In this case I was required to relocate the finance
functions from Witney and Bolton to Banbury whilst implementing a new computer
system (Tetra CS3) at that time.
·
The
IT function of J Sainsbury plc spends about £260m
pa (2006 prices) and about 550 staff.
·
The
Olympic Delivery Authority is the body tasked with the
construction of the transport and venues for the London 2012 Olympics, and my
time there was during its start-up phase
More detail
can be found here.
The reason why the activities
of business integration, business start-up and in-sourcing are similar is the a need to establish internal controls, reporting
structures, forecasting and usually a computer. Contracts may need to be novated and sometimes new legal structures established;
often there are implications for corporation and value added taxes.
In my paper acquisition of SME's, I have summarised
the sort of steps that should be taken in acquiring a business and then
subsequently explained how mistakes made at the pre-acquisition stage have had
an impact on the post-acquisition implementation.
In integration scenarios, a
lot is made about culture. Phrases that use words such as "fit" and
"change" are used often and the word itself is used most often of
all, usually with little thought as to its meaning. For an interim starting an
assignment, culture is always an important consideration, but with a
post-acquisition integration, it is most important because there will be at
least two cultures (the acquired and the acquiror)
and how these interact until one subsumes the other is most important. A discussion
about culture appears in this paper.
Start-ups demand almost all
skills of the financial manager, particularly in an SME environment. The great
things here are the ability to make your mark and to use creativity in
establishing something new. Examples include:
·
set
up policies and procedures - often in association with other disciplines such
as HR in drafting staff expenses and relocation policies and sales in drafting
a credit policy
·
make sure the tax authorities are happy,
for example in establishing PAYE settlement agreements, expenses dispensation
arrangements (in association with HR) and VAT governance. There may be other tax
issues that are specific to the business that need to be set up, particularly
if the organisation is partially exempt (as happens in the public sector) or there are special VAT schemes
or if the organisation is property company and needs an "opt-to-tax"
policy
·
implement
computer systems and setting up the management reporting that satisfies
business managers and owners
·
create
and agree the organisation's first budget
·
its
possible that the organisation may need to raise funds in its
early life
·
set
up the company secretarial function and other corporate governance processes
·
review supplier and customer contracts.
These may have important connotations for disclosure in accounts (particularly
if there are changes to be made in accounting frameworks such as from UK GAAP
to IFRS) and may require finance input to the negotiation of such contracts by
sales or procurement management.
·
ensure
that the business has the appropriate financial controls in place
·
the first year's statutory accounting
needs to be concluded successfully. A key part of this is the handling the
relationship with the organisation's external auditor, particularly around
agreeing accounting policies. In the public
sector there may be other aspects to setup, such as measuring BVPI8 and
KLOE.
I have worked in start-ups in
both the public sector (the ODA) and the private sector (Interconnect and Automatic
Minibars)