Wbg urges SMEs seeking equity finance to get themselves investment-ready
Wbg, one of Scotland’s leading independent specialist full-service accountancy firms, has urged SMEs seeking equity finance to get themselves investment-ready.
While research from the British Business Bank shows that equity deal activity involving smaller businesses in Scotland picked up during the first half of 2024, one of only two parts of the UK to experience a year-on-year increase after a difficult 2023, Tom Faichnie, partner and head of diligence & transactions at Wbg’s corporate finance team, says that while there is a lot of equity funding available on paper, it can be problematic to access and longer than expected to secure.
“While money is available for growing businesses from many of the government-backed funds, the main problem we find is that many businesses are not quite ready for investment because their business plans are not sufficiently robust and their financials are not readily available,” he said.
“SMEs could considerably improve their prospects for securing equity finance by getting their financial information investor-ready, getting the numbers available for a funder to analyse in detail and so gain a better understanding of the business and its growth potential.”
Tom notes that while there are ample opportunities for businesses to grow in the Scottish market as a result of an emergence of market-leading technologies, unless there are properly planned business propositions in place, supported by all the requisite financials, then potential funding deals will fail to materialise.
“In a dynamic marketplace where so many enterprises are actively seeking equity and funders are receiving multiple opportunities, a well-prepared proposal with detailed financial accounts and forecasts will put ambitious SMEs to the front of the queue for funding,” he said.
“It is not uncommon for interest to be generated from funders in a potential investment which is subsequently put on hold when the business case is not readily available, or the business plan is shown to have little foundation.
“Business owners should give themselves sufficient time to undertake a thorough investment-ready process, while many significantly underestimate the time or the depth of due diligence required by potential funders.
“I would advise SMEs seeking equity funding to make it as easy as possible for a funder to do a deal by making sure that they are investment-ready because that will put them at the front of the queue.”
