BARRY EDWARDS AND ASSOCIATES
Barry Edwards and Associates (BEA) started in 1982 to assist small businesses to present well-researched business plans to investors, mainly the new funds created to take advantage of the tax free incentives offered by government.
In 1981 the Business Start-Up Scheme was launched which became the Business Expansion Scheme (BES) in 1983. The main principle behind these schemes was to encourage private investors to provide venture capital for unquoted companies, initially for a minimum of five years. The thinking behind BES was to give tax incentives to investors who bought shares in small trading companies to provide long-term funds that would otherwise have been unavailable to these businesses.
All this was very new at the time and the format was for financial institutions to set up funds to take advantage of these tax incentives. The expectation was that new exciting businesses would be funded to grow rapidly and provide a steady stream of investment opportunities for them which would not have been available otherwise. The role of BEA was to find suitable companies that met these criteria and earn a fee in the process.
At the time, there were a variety of working capital lenders that were more adventurous than the main banks which could be approached to provide a more entrepreneurial lending facility that enhanced the equity investment by the BES funds. BEA put the equity and lending packages together for these growing businesses.
BEA grew during the 1980’s and worked with many ‘associates’ who provided a range of professional support for these businesses if they needed assistance implementing their business plans. The lenders found this particularly beneficial since the concept was quite new at the time and there was a lot of interaction that helped all parties. By the early 1990’s there were around 40 associates and BEA established a small office in the city to create a base for all those involved.
The recession of 1992/3 brought an end to most of the activities of BEA and it never re-established when the climate had finally returned to a new kind of normal around 1996. Many of the equity funds had closed down and the venture capital sector concentrated more on growing established businesses needing a minimum of £2 to £3 million as a minimum which was not the market for BEA. Lending was still difficult for smaller businesses and many had disappeared during the recession which was more severe than most people realised.
In the middle of the recession in 1993, the Government launched Business Link which provided many of the services which BEA offered at highly subsidised prices. This was followed by a series of loan guarantee schemes which made loan funds available to SMEs that would previously have been ineligible and would have had to seek equity funding. This totally altered BEA’s trading landscape. Also, at this time most of the larger accountants and solicitors had set up departments to help SME’s raise funds to attract new clients. BEA did not have the resources to make a difference and a new direction had to be taken to develop BEA.
The connections that had been built up during the 1980’s created opportunities in a new way. Some of the companies that had survived the recession known to BEA and other new relationships were looking for small amounts of equity to help with growth but mostly needed strategic advice and an outside opinion of how to develop their businesses. BEA could provide this equity investment and provide the support required by these companies. In effect, this meant that Barry Edwards and a few associates fulfilled this role and worked with these businesses to take them to the next stage of their development when new more substantial investors could take over.
It is the nature of small businesses that not all plans work out as forecast but some of these companies did well and moved on allowing BEA to capitalise on the investments made. During this time some of us at BEA were working on new ideas in finance and developed innovative concepts which we presented to a range of contacts. You can read about these in more detail in the Financial Innovation heading, the next heading at the top of the page.
BEA still has a couple of investments which are slowly moving ahead at the moment but an exciting activity recently has been writing a blog for one of these businesses, Txtreme. It has been going out for five years now and has received positive reactions but it turns out it is conflicting with the main activity of the company in the search engines which has led to the creation of the Barry Edwards and Associates site. You can see all the previous posts in the archives section in the right hand column of this page.
We are planning to become the most innovative and progressive commentators’ of world events which have a financial subject matter and propose new ways of providing finance for companies and government. We hope you will enjoy the posts and look forward to hearing your comments on them from time to time.