James Hunt is a solicitor, serial entrepreneur and founder of Everyman Legal ” a new type of law firm providing legal services for entrepreneurs. The company of solicitors is the first in the UK to announce it will take advantage of the new practising regime created under the Legal Services Act by seeking a stock market admission. The company intends to trade its shares on Sharemark a stock market for smaller companies in the last quarter of 2012. In an honest and open account for Real Business, James Hunt will be charting the ups and downs of preparing his company for an admission.
Over the past three months, our management team has been taken through six workshops to define the Everyman Legal brand. We’re now equipped with our value proposition and the psychographic profile of our ideal prospect.
Our focus is now on developing a sales and marketing plan for our home territory of Oxfordshire. This will be the model for our franchises as we scale up our business ahead of our Sharemark admission.
The decision has been made to focus this sales and marketing plan on the launch of an exemplar legal product. The legal product we have chosen is a succession planning tool designed for owner managers who do not want to or cannot sell their companies to a third party.
The solution is to sell to a management team groomed and prepared by the owner. This is done in two stages with funding out of retained cash, bank debt and deferred consideration paid to the owner.
In the experience of our team this is a common situation and a very powerful technique. The owner sells out and is paid out of future cash flow paying a 10 per cent tax charge. The product will be one of our exit plan series.
The five most common exit mistakes that business owners make in our experience are:
- not planning for their retirement: inevitably this results in a hurried sale taking place due to ill-health or death. So planning carefully for succession is key
- failing to appreciate the strengths and weaknesses of their management team: our design includes psychometric testing of the owner and the team
- no market research on the potential to grow into overseas markets to reach the companies true potential: this can be a great low cost/low risk way to grow a company to an MBO
- making an ill-conceived acquisition to grow to a size that will make the company more saleable: turnover of not less than £10m is often cited as a key size threshold to catch the attention of serious buyers but most acquisitions fail. Organic growth through an incentivised team is generally best
- choosing the wrong person to lead the potential MBO and/or not supporting and grooming the candidate: the use of an experienced non-executive director can be invaluable in this process
With our product designed and named (the V-F MBO the vendor-funded management buy-out!) we are ready for launch.
The plan is to take this product to market initially through accountancy firms in Oxfordshire. A series of presentations are fixed for March and April.
In all of this work I’m conscious that we need to create valuable intellectual property and know-how as well as a methodology to create a sales pipeline of our planned local hub franchises. This will all be part of what I hope will be a compelling growth story for Everyman Legal as we work towards our Sharemark admission.