Recent figures released by UK Trade & Investment revealed an increase in the amount of direct foreign investment coming into the UK during the last financial year (2008-09).
Despite Britain being deep in a recession, it remains the most popular destination for foreign investment in Europe and the second most popular in the world. With a total of 53 countries investing in projects and organisations in the UK last year, it appears that investing in Britain is a trend which is here to stay.
We work in partnership with the East of England Development Agency, who in turn work to encourage sustainable economic growth and regeneration in the region. Over the last 12 months we have both witnessed a noticeable increase in the flow of enquiries from foreign companies looking to invest or set up in the UK. One of the main reasons for this is likely to be that some foreign investors have not been as affected by the recession and are thus well positioned to channel money into businesses in the UK or to step in to snap up potential bargains.
It is my view that there are many more potential foreign investors, buoyed by the strength of the euro, waiting for the market to ‘bottom-out’ before coming forward with cash-in-hand offers.
My feeling is that there are signs that the market has pretty much bottomed out now, so I expect investors to start coming forward with even more vigour to ‘cherry pick’ businesses they are keen to invest in or acquire. As such, now is the time for SMEs to position themselves as an attractive – that is profitable – enterprise to would-be investors.
Such investment is likely to enable you to grow your business, for example by providing much needed funds for R&D, increasing premises or headcount, but could also just provide greater security and clear any outstanding debts.
Key points to remember, however, are to be realistic with valuations of your business and ensure your book-keeping and accounts are accurate, fully up to date and able to withstand the scrutiny of a potential investor. It may also be necessary to carry out research in order to support any claims or projections you might put forward to an investor and this must also take into account how your business will be affected by the current economic conditions.
We have recently been involved in a £400m investment in Norfolk from a German manufacturer which has created local jobs and profitable opportunities for local businesses – proving that the opportunities are there for the taking, you just need to ensure you and your business are ready when the offer comes.
Chris Wilks is head of corporate at law firm SA Law.
www.salaw.com