Martin Prentice, Accountancy Age, Thursday 23 September 2010 at 00:45:00

Accounting practices may think it?s hard to come across bank funding at themoment, but they may be mistaken


After what has admittedly been a very tough time for the financial sector andwith banks? lending practices coming under more scrutiny than ever, it is easyto see why many might be sceptical as to whether the situation is starting toimprove. However, there has been an encouraging increase in deal opportunitiesin recent months, with accountancy firms now demonstrating they are once againin a position to consider expansion, and are able to capitalise on opportunitiesemerging in the market.

A recession can be a catalyst for positive change, enabling businesses andindustries to re-evaluate their situation, streamline their business model andseize on new opportunities. With the necessary support from banks, firms will bein a better position to take advantage of the opportunities that arise as therecovery eventually gains momentum.

Recessions do not last forever and, even in the midst of a downturn, bankshave demonstrated that they are open to lend to those accountancy firms that areable to demonstrate their stability and future planning. We respond positivelyto firms that have a strong management structure in place and have the abilityto illustrate a robust and detailed future business plan, as well asdemonstrating strong financial performance against the latest budgets andcashflow projections. A lot of restructuring activity has taken place and themost successful firms have improved financial management disciplines, which is awelcome move.

Many banks have made a commitment to the accountancy profession in the UK andfunding is there for the right projects. By way of example, earlier this year weworked closely with RSM Tenon, a leading provider of accounting and businessadvice to entrepreneurs. We had a clear understanding of its strategy and visionand we were able to provide a 35m funding package to assist in the acquisitionof RSM Bentley Jennison.
</br>We also supported RSM Tenon recently when it acquired part of the Vantisbusiness. By drawing on the excellent working relationship we as a bank havewith RSM Tenon, we were able to work in partnership with the firm?s seniormanagement team and to provide it with a further 10m of bank facilities tosupport the Vantis transaction.

Up to the Challenge

Many firms are currently focused on steering a course through the recessionand its aftermath, however, it is important to remember not to lose sight offuture planning. Firms need to ensure they consider future trading, how toattract and retain clients and whether capital expenditure is required in theshort term in order to facilitate long-term growth. If part of the longer-termstrategy involves capital expenditure, potential funding from banks forexpansion or refurbishment projects may be necessary.

In order to ensure that your firm stands the best chance of securing thisfunding, it is essential to prepare a carefully thought out business planfocusing on both day-to-day performance and cash management. Banks will expectto see a thorough assessment of the sector trends, a good understanding of themarketplace and, where possible, a clear demonstration of knowledge of theactions of peer group competitors. It is imperative that management teams areable to articulate that they have the necessary all-round blend of experience,expertise and skills to deliver a plan which will be stress tested. This willthen need to be executed in an ever-changing economic and commercialenvironment.

From working closely with our customers, we understand the difficult timesthe sector has experienced recently. However, from regular discussions with keyplayers in the sector, prospects are picking up again and businesses are comingto us looking for advice on how they can leverage the opportunities that areemerging as a result. This is very good news for the sector as a whole, and weare working in partnership with our customers to ensure they are in the bestpossible position to make the most of these opportunities as they arise.

Encouragingly there are still deals being done, and often these are based onhaving a sound management structure in place. My advice to senior management atfirms is to ensure you talk to your bank and make them aware of your strategyand thinking as it evolves as early as possible. This will strengthen therelationship you have with your bank and, in turn, allow them to gain a solidunderstanding of your current objectives and plans for growth.

In the current climate, it is essential to have some sense of a ?Plan B?,even if this may be subject to change. One lesson to be learnt from the eventsof the last 18-24 months is that best-in-class management teams are agile andcapable of adapting to changing circumstances quickly. This is where we canprovide input and guidance, based on our knowledge and experience, to helpsenior management plan and implement realistic forecasts. That is why I believethat firms that emerge the strongest from the recession will be those that havethe closest relationship with their bank.

Steady as you grow

There are many accountancy firms that are evaluating their options carefullyand do not want to jump in to new opportunities until they are fully confidentof the outcome ? a ?steady as you go? approach until things really start to pickup.

However, while times remain challenging, managing your business to ensureboth survival and growth in a safe way is achievable. As growth opportunitiesfor businesses begin to emerge, it is important to find a trusted bankingpartner to provide your business with robust and strategic financial advice andsupport. I also feel that as the dust from the recession settles, we will beginto see more consolidation and further selective M&A activity across theaccountancy sector which will present opportunities.

Today?s management teams have become more professional since the dark days ofthe last recession and professional practices, including accountants, are ableto take a much more balanced view of the economy, which, in turn, enables us toprovide ongoing and effective support in both difficult and good times.

The accountancy sector is a vibrant one with a diverse range of businessesand skills and we?re committed to helping the profession realise its ambitions ?whether that be through supporting a new firm, or continuing to strengthenrelationships with existing customers.

Martin Prentice is relationship director, professional practices atLloyds TSB Corporate Markets