Consultancy

Our consulting services are limited to analytical and valuation work, but we have a fairly broad remit. Examples of the sort of work in which we engage include

  • Independent information for non-executive directors
  • Tenant analyses
  • Simplified accounts for employee communications
  • Management information for executives
  • Industry studies
  • Company Valuations
  • Sector assessments
  • IPO Assessment
  • Social Media Analyses
  • Employee Demographics Analyses

There are 3 common themes across all the above

  1. Rigorous financial analysis
  2. Accurate data
  3. Clear presentation

Elsewhere on this site you can find details of our industry reports, and our analyses of partner demographics and social media data, while we also cover company valuations and IPO assessments under Bespoke Research. We outline below the types of services we can offer, but the key reasons to use us, rather than more conventional advisers are:

We are independent and impartial

Our only interest is in offering unbiased, impartial and honest advice. We have no incentive to advise you to engage in a transaction, whether it's a float a takeover or a buyback - we shall give you impartial advice

We are responsive

We are only a small team, but we can complete assignments quickly and at short notice. We are accustomed to making quick decisions, and to forming judgments on the basis  of information that is often only 80% of the picture. In a perfect world, you might have all the information you need, but more often the opportunity recedes as time passes acquiring the last piece of data. If you cannot go forward on 80% of the information, you probably should avoid this transaction as the odds of success are too finely balanced.

Our analysis is rigorous and the output simple

We take pride in doing detailed work, but producing output that is easy to assimilate.

Simplified accounts for employees

We specialise in producing simple to understand financial information. We can distil a set of accounts into a format that is simple, comprehensible and even entertaining. Examples are available on request.

Management information for executives

A typical example of the sort of work we perform for a medium sized company is a project in UK retail. The client owned a chain of outlets with a £60m turnover and he faced competition from a dozen chains. He felt that he knew what they were paying for products, and he had a good idea of the relative salary levels. But he neither had time, nor the expertise in-house to do a formal assessment of where he stood in relation to his competition.
Our analysis showed how his company stacked up on a range of key metrics like

  • Gross margin
  • Sales per employee
  • Sales growth
  • Sales per outlet
  • Indebtedness
  • Duration of lease commitments

While initially sceptical, he acknowledged that his worst case showed limited downside - he paid for the report and it was wasted money because he didn’t learn anything at all. But the upside on a £60m turnover base was substantial if he could identify which of his competitors had the greatest productivity, which had better sales mixes or were buying more effectively, leading to improved gross margins; and knowing which of his competitors had the most debt helped in negotiations with common suppliers.


They key point to emerge from our early discussions and one which is common to most private companies is that the owner knows his industry inside out; he does not need analysis of his competitors’ businesses, he just needs to understand which are enjoying success in particular financial parameters. From our perspective, we don’t need to invest significant time in understanding the industry; we simply need to produce reliable financial indicators, which means the delivery of appropriate financial information at a sensible cost.

We can even produce significant industry studies covering a large number of companies at a sensible cost by publishing the results at a later date, after our client has had time to digest the information.

 

Case Study

An example of the sort of work we can perform in the unquoted arena is an analytical tool which we developed for one of the big 4 audit firms. The UK’s Senior Partner was concerned that the firm was seeing an increased level of litigation risk and was looking at how they could best protect themselves by identifying potential issues and at the same time improve their productivity.

Our solution was a tool which all their audit teams could use at the commencement of the year end audit. The tool takes the draft accounts and identifies anomalies, potential issues, and key areas of risk. Using a graphical interface, anomalies are clearly flagged. The tool has afforded the audit teams a major productivity boost as it allows senior members of the team to focus on areas where there is a real risk of mis-statement.

We have a similar tool for investors in quoted companies – the tool identifies a company’s financial quality. Its graphical interface clearly flags anomalies and is constructed in various modules including balance sheet analysis, indebtedness or leverage, operational gearing, and even cooking the books!

 

Industry Studies

Our industry reports are available from the individual industry pages of the website. We can also produce industry reports on request either for the whole industry or a particular geographical area or companies of a particular size range. We are able to offer these reports for general sale in order to subsidise the costs of production. Hence quite significant studies can be performed at a reasonable cost.

Currently industry reports are available on

Football - The English Premier League

Brewing - The UK Private Brewing Sector

The Legal Profession - Solicitors

UK Supermarkets

 

Independent Data for boards (especially NEDs) 

Our affiliated operation Independent Insight produces a monthly information pack and annual or bi-annual assessments for non-executives on larger quoted company boards. Non-execs or NEDs are subject to stringent legal requirements and are at personal risk if these requirements are not adhered to, and hence the provision of reliable and independent information is an important facet of governance.


Our monthly and bi-annual packs inform NEDs independently of executive management. This annual or bi-annual service gives NEDs important feedback from the investment community, covering:

  • Feedback from leading institutional investors, both shareholders and non-shareholders, on their perceptions of the company and management
  • Feedback from these institutions on executive management, shareholder communications, and other governance issues
  • The institutions’ views on issues affecting the company, their top concerns, what is holding them back from buying the shares, and an overview of the key investor concerns
  • A similar independent feedback from the key sell-side analysts covering the shares

This pack, which we recommend is produced on an annual basis amounts to an independent audit of the key issues and concerns of the investment community on your company.  If the share price is depressed because the market is concerned about your last acquisition or the CEO’s strategy, our feedback will bring the issue into your focus.

Our monthly packs are designed to give you an independent view of how the company is performing relative to its peer group and covers the following information:

  • Changes in sell-side recommendations; is your stock being downgraded when everyone else is being upgraded?
  • Changes in estimates: is your stock seeing estimate upgrades at the same rate as your competitors or peer group?
  • Relative share price moves of your company vs its peer group
  • Valuation and valuation changes – your company and its peer group

The pack is designed in a simple and clear format which allows NEDs easily to make an independent assessment of performance. Although designed primarily for quoted companies, the round-up of quoted competitors’  performance may also be useful for unquoted companies. Please contact us for more information or to view the summary of our pilot study on Marks and Spencer (available to NEDs only).

Tenant analysis

One of our clients had an office let to a medium sized firm of lawyers. It’s a well-known and respected firm, and our client was very comfortable with the tenant, but their lease was coming up for renewal so he asked for our input. Our client felt that he could continue to let the offices cheaply because of the security of the tenant. We surprised him in two ways:


1 the solicitor in question may have been well respected but the partners were drawing more than they were earning and the firm’s capital base was thin and it was quite indebted. Our client had previously not even considered credit risk, but realised that he should have done so.
2 Even more eye-opening was the fact that the firm in question had relatively high margins, because it enjoyed a bottom-quintile rent per person ratio. The tenant could afford to pay a significantly higher rent.

The solicitor in question was rather surprised when entering lease renewal discussions to find the landlord was well-informed about their business and demanding a significant rent increase. Our client was pleased with the results and we have been asked to evaluate their other private tenants ahead of renewals.

Our service is of particular relevance to those landlords which charge a turnover related rent. We evaluate a tenant’s overall rent to turnover ratio, gross margin, sales per head, sales growth trend and debt and fixed charges cover; we also estimate turnover per retail unit. This dataset allows the landlord to profile his charges relative to the tenant’s average, and to determine the profitability of his units relative to his tenant’s average experience, giving the landlord a much better understanding ahead of lease renewal negotiations.

"Seeing the Tenant Analysis Report made me realise how superficial the analysis in our industry has been to date." Trevor Silver, CEO Landid and former CEO Akeler Group.