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In this edition, we take a look at the evolving M&A energy services sector, we discuss tradition versus innovation when it comes to financial reporting, and we take a look at Hutcheon Mearns Real Estate on year on. We also get to know Aimee O’Connor, our Business Relationship Manager, in this months 10-minute interview.
The experts at Hutcheon Mearns discuss the energy M&A outlook for 2024.
The profitability of oil and gas versus the excitement for renewables is creating an interesting dynamic for investors across the energy industry.
That’s the verdict according to Naill Benzahia, corporate finance director at Hutcheon Mearns.
Working on the buy and sell side of transactions for small, medium and large energy companies, he’s noticed a shift in investor appetite for oil and gas.
The energy M&A outlook going into 2024
Naill explained: “Most oil and gas companies are performing very well financially, with strong underlying trading. The age profile of the assets in the UK mean they require significant maintenance to maximise economic recovery. This is fuelled further by the political agenda and focus on energy security.
“Albeit, it will be interesting to see how the impact of COP28 and the agreement to transition away from fossil fuels impacts real investment.
“All of this ultimately translates into M&A activity. Generally trading has improved which means companies in this space are performing better than they have in the recent past.
“There is also a growing realisation that transition has to be just that. Without oil and gas we will render ourselves uneconomical in a transitional environment – we need hydrocarbons to develop and commission transitional technologies.
“Coming out of Covid, there were quite poor results all round. Now, these companies have a number of years of improving financial performance so it’s a good time to look at selling if the longer-term story is compelling enough. This is generating activity.
“There is an appetite again for oilfield services businesses, however valuations have tempered.
“Crucially, oil and gas focused companies must exhibit an ability to transition or provide a platform upon which to build a business equipped to transition alongside its clients.
“Greenwashing, however, doesn’t work – it needs to be tangible.”
M&A activity in renewable energy
New technologies and investment are needed to drive decarbonisation, says Naill from Hutcheon Mearns.
Meanwhile, demand remains strong for renewables.
Naill said: “Renewable companies are commanding higher valuations and more favourable structures due to buyer appetite.
“There have, however, been some headwinds in this space highlighted by the government’s Contracts for Difference (CfD) Allocation Round 5 (AR5) where no bids were made for new offshore wind farms.
“There are a lot of delays, too, and in some cases cancellations, like the Orsted Ocean Wind I and II projects in the US, as a result of rising costs in the offshore wind supply chain.
“Despite the challenges in the near term for offshore wind, the longer term macroeconomic drivers remain strong, hence the unwavering appetite from investors. This is reinforced by government policy, like the improved strike price for offshore wind in advance of Allocation Round 6 (AR6).”
Another increasingly important element is decarbonisation.
Naill shared: “Many people now accept that oil and gas will be part of the energy mix for a prolonged period as the energy supply transitions, so a key theme is how to minimise the carbon footprint of this.”
New technologies and investment are needed to drive decarbonisation, says Naill, so businesses in this space can prove attractive to investors.
The role of banks in energy services M&A
And of course, across the board, banking remains challenging but important for M&A. Naill explained: “The challenges aren’t specific to energy, it’s evident across multiple sectors given high interest rates and global economic challenges. But the banks are open, there’s a mixture of high street and alternative lenders or challenger banks offering debt solutions.
“Generally, banks are still quite averse to oil and gas. Renewables are a lot easier, the challenge is displaying steady cashflow generation over a prolonged period to underpin a funding package.”
All in all, the M&A landscape in the energy industry is dynamic and investor appetite is there, with Hutcheon Mearns working on driving forward deals for its clients.
Naill ended: “The level of public and private investment into the energy sector remains massive, which creates huge opportunity. There’s the cash to be generated by oil and gas, versus the excitement and drive towards renewables.”
Contact Naill Benzahia for more information on the energy M&A outlook for 2024.
This article was featured in Energy Voice on 5th January 2024.
In this edition, we share our continued expansion with the announcement of our new Edinburgh office, Danielle Murray explains why outsourcing your finance department is ideal for a start up, and Hutcheon Mearns Real Estate secures a new premises for Pentagon Freight. We also get to know our Head of Resourcing – Edinburgh, Jack Ramage, in this months 10 Minute Interview.
Professional services advisory firm Hutcheon Mearns is continuing its programme of strategic expansion across Scotland with the opening of an Edinburgh office which will deliver the company’s full-suite service offering to clients across the central belt.
This investment is the latest in a series of recent steps taken by Hutcheon Mearns to bolster its market presence and deliver on its own growth plan. As part of this, the central region has always been viewed as a linchpin for the company’s long term future development.
To take the business forward to the next stage, the company has made three senior appointments in Edinburgh who will lead on the provision of Hutcheon Mearns’ innovative offering.
Angela McCann has been appointed Head of Growth. An accountancy honours graduate who has spent more than 20 years in business development, business growth and executive search, Angela has an extensive background in senior finance recruitment up to board level and brings that experience into her new role. She takes on responsibility for driving revenue growth, business development and market expansion in the Central Belt.
Lianne Ross joins as Head of Corporate Finance to build the firm’s business Deals Advisory services in the region. Lianne has 15 years’ international experience in corporate finance and development, and her role involves leading M&A projects from origination to completion.
Jack Ramage, meanwhile, takes on the role of Head of Resourcing. With a specialist background in accountancy and finance recruitment in the Central Belt, Jack heads up Hutcheon Mearns’ finance resource solutions locally. He is focused on permanent and interim accountancy and finance services for clients in the private, public and third sectors, and his appointment underlines Hutcheon Mearns’ distinctive service offering: resourcing solutions led by qualified finance professionals and focused on the strategic priorities of clients.
Making up the Edinburgh team are accountant Karolina Slowik-Skiba and accounts assistant Daniel Burns who have been instrumental in establishing the company’s presence in the capital.
Setting up its new team means Hutcheon Mearns is now positioned to offer its complete range of integrated services – focused on helping clients build finance teams, solve business problems and deliver growth strategies – across the region with its Deals, People and Insights service lines.
Hutcheon Mearns Managing Director Craig Hutcheon says: “Opening an office in the Central Belt has been the focus of our attention for some time and these appointments are transformative in terms of what we are able to offer clients in the region.
“We are now equipped to deliver across our entire portfolio of services, ranging from finance team resourcing to corporate finance support and the application of advanced technology to help clients solve problems and attain optimum performance.
“Jack, Lianne and Angela are experienced professionals of the highest calibre and it’s great to have them on board. Their appointments add significant new skills, knowledge and experience to our business – not only in Edinburgh, but across our network of offices. We look forward to working together to build their teams to provide meaningful, innovative and agile solutions to our clients.”
Hutcheon Mearns has enjoyed a period of strong growth in recent years. this includes the opening of an office in Dundee, where it has invested in building its Tayside team and growing its business-wide staff numbers to approximately 50.
It also diversified its business activities with the launch earlier this year of Hutcheon Mearns Real Estate, which provides clients with independent advice and expertise on their commercial property portfolios.
And it opened a new Aberdeen office in 2023 to help the firm accommodate current growth and future development plans. It undertook an extensive refurbishment of the office at 2 Queens Road in the city to create an HQ befitting a firm with national growth ambitions.
The Edinburgh office of Hutcheon Mearns is presently located at 11 Rutland Square.
Tap into Hutcheon Mearns’ finance expertise and set your business up for success.
Launching and then building a start-up is nonstop, especially if you’re trying to keep costs down and profits high – but that doesn’t mean you have to do everything for yourself. In some cases, outsourcing work can really pay off in the long run, like when it comes to resourcing your finance department.
With Hutcheon Mearns’ outsourced finance service, you can leverage the expertise of the firm’s established accounting team and ensure your books are in tip-top shape for one monthly fee.
Danielle Murray, senior finance manager in the Hutcheon Mearns outsourced finance team, said: “We can accommodate all the roles and responsibilities of a finance team under one roof. So, rather than having to employ several people performing all the relevant finance functions, we’re able to do all this within our team for a fixed monthly retainer.
“We can do everything from day-to-day bookkeeping to cash flow forecasting, managements accounting, VAT returns, annual statutory submissions and more. We have a great variety of skills and experience within the team.”
Hutcheon Mearns, a professional services firm, launched its outsourced finance service last year. Headed up by Scott Garden, it currently consists of four qualified accountants and two experienced assistant accountants, offering a wide range of skills and experience that allow them to tackle all the demands of a finance department.
Danielle explained: “Every day and every client is different. A lot of my role is adapting to what the client is currently doing and seeing how we can develop their set-up to make things easier and more streamlined. Basically, we want to get to the end goal of producing timely, relevant financial reporting to help them in their day-to-day business decision making.
“With some clients, there’s reason and logic behind why they do things the way they are, so it’s just getting to know that.
“If we need any specialised skills, there are other departments within Hutcheon Mearns who can support us, rather than having to go to someone external.” For start-ups, the outsourced finance team can also help you set up your accounting system correctly right from the get-go.
Danielle said: “Outsourcing your finance department is ideal for a start-up. We’re all from different backgrounds and have significant experience in the use of different software packages, so although we normally recommend Xero for smaller clients, we are adept at using a range of finance systems including SAP, Microsoft Business Central and Sage.
“We can offer demonstrations on how finance or accounting software works, or we can help integrate start-ups into a system like Xero and get it working for them.
“There are a huge amount of bolt-on applications for Xero so we can point them in the direction of apps that can help with things like expenses, timesheet entry and profitability –getting all those things set up at the outset can help reduce internal administrative time and manual data entry.
“It can be overwhelming starting a new business and going into a new system like Xero, but we can help.”
The Hutcheon Mearns outsourced finance team currently has clients in both Aberdeen and Tayside and is well placed to expand throughout Scotland and the UK. The team is also always on the lookout for exceptional talent, so if you’d like to join a company where you’ll be appreciated, please reach out.
Any start-ups or other businesses considering outsourcing can find out more at hutcheonmearns.co.uk.
The benefits of outsourced finance and accounting
There are many different benefits that come with outsourcing finance and accounting work to Hutcheon Mearns. This includes:
One monthly fee. Instead of having to employ various people to create a finance team and the costs that can come with that, you’ll just have one monthly retainer fee to pay.
Holiday cover guaranteed. If you currently have a very small finance team, holidays and other absences can hold up work. There is always someone on the Hutcheon Mearns outsourced finance team to cover holidays.
More time for other business areas. With all your accounting taken care of, you can focus instead on running and building your business. Hutcheon Mearns can provide you with tailored financial reporting to help you make good business decisions.
Help finding the right software. Hutcheon Mearns can help you get the most from accounting software, taking care of the heavy lifting for you.
Tap into expertise. The outsourced finance team are experienced accountants and finance managers, and you’ll benefit from all their shared skills and knowledge. They can also tap into the wider Hutcheon Mearns team in more specialist cases.
This article was featured in The Press and Journal on 27th October 2023.
You can view the online article HERE.
By Ally Mitchell CA, Head of Insights
As the use of business intelligence and other data platforms continues to rise, an important question businesses should be asking themselves is: are we able to access the underlying data from our systems? This may be particularly pertinent when investigating new finance or operational systems.
When we talk about underlying data, we’re not talking about being able to download reports from a system. It’s whether you can access the base data tables which are used to generate those reports. For example, in a finance ERP system, you may be able to download a trial balance report, but this will have been generated using multiple data tables from within the system such as: nominal ledger transactions, nominal ledger accounts, and the financial calendar.
When looking at extracting data from a system – there are two main considerations. The first of these is:
Is the system cloud-based, or ‘on-premises’ (this is where the data is stored on a local server within the business)?
On-premises systems generally provide much easier access to data, as the underlying databases are stored locally. Often the underlying database is SQL Server based – and incredibly easy to connect to (subject to being given permission to the database of course!). On-premises systems do often require additional steps to get the data loaded into analytics tools such as Power BI which primarily run on the cloud. For Power BI, this usually involves the installation of an ‘on-premises data gateway’ on an internal server which acts as a bridge between your servers and the Power BI servers – but this process is quick, easy and secure.
If a system is cloud-based, it can be more difficult to access the underlying data – mainly due to it now being stored on a third-party’s servers. This leads us onto the second question:
If the system is cloud-based – how do we access the underlying data?
The answer to this question can have one of four answers:
- The system has built-in capabilities to allow you to connect to and extract the underlying data with little effort. Some examples of this are Microsoft Dynamics and SAP which have in-built OData feeds.
- The system has an ‘Application Programming Interface (‘API’) available which you can use to extract data. Using an API will require an understanding of how it works and some APIs can be quite restrictive. Some systems which use this approach are Xero, QuickBooks, and Sage Business Cloud Accounting. Often we find using add-ins from third party developers (such as CData and ODataLink) quicker and easier in this scenario, as they already have the expertise in how the API works, and keep their add-ins up to date as the API develops.
- The system provider will be able to give you access to the data – but at a cost. I’m not a fan of this situation at all – as it basically amounts to holding your data hostage. Sadly though, this does happen where providers will require you to purchase one or more additional ‘modules’ for their system to obtain data extraction capabilities.
- You can’t. I’ve not personally encountered this situation yet (and hopefully never will) – but I guarantee it exists somewhere.
If you’re considering utilising your data for business intelligence and analytics, it’s worth understanding which approach your existing systems will require you to take. Equally, if you’re planning to invest in a new system – I’d highly recommend ensuring access to all your underlying data is included.
If you have any questions on this topic, or anything else relating to business intelligence and analytics – get in touch with the Insights team at Hutcheon Mearns: https://www.hutcheonmearns.co.uk/contact/
This article was featured in The Press and Journal in January 2023.
You can view the online article HERE.
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