Proposals for Partial Guarantee Scheme Welcomed - Mazars - Ireland

Mazars expects more companies to seek external funding in 2012.

Thursday, 24 November 2011

Enda Gunnell, Partner, Mazars has said that any proposals by Minister Bruton to help viable firms with solid business plans to obtain credit from banks is to be welcomed.

“The Minister will announce details of his proposed ‘partial guarantee scheme’ later today which will be a valuable lifeline to many micro-enterprises which have been badly hit in the current ‘credit famine’ impacting on the wider business sector”, he said.

He warned however, that if the scheme was to achieve its intended effect it would need to ‘short on red tape’ so that it can be easily administered by the banks and easily accessed by viable businesses which have the potential to create employment.

Mr. Gunnell was speaking at a Mazars breakfast briefing entitled ‘Green Shoots – Growing Your Business’.

“There is no doubt that many entrepreneurs are finding it hard to secure the working capital they need to grow their business.  The rules of the game have changed and traditional sources of such funds – from banks to VC firms and business angels - are all scrutinising business proposals more stringently.

“What we are now seeing is a return to fundamentals. There is increased scrutiny on all aspects of the business, not just the financials.  More and more, the quality of the management team and their willingness to put their own funds into the business is a determining factor for potential investors”.

“Interestingly, there has been a drop in the number of companies actively seeking funding over the past few years.  There has been a definite focus on business consolidation and reducing overall debt levels as far as possible.  However, we do expect to see more companies seeking external funding in 2012 and 2013.  A quick survey of  companies attending today’s breakfast briefing, found that 50% will be seeking external funding and of these two thirds of companies, will be doing so for working capital reasons and the remainder want to fund acquisitions”.

Mr. Gunnell said that there were a number of sectors that remain attractive to investors. 

“Companies in the health, energy, technology and food sectors are finding more favour with investors at present.  Also, companies that are not influenced by the current downturn, are export oriented or have a product or service that have a global application tend to be viewed as offering the optimal risk-reward balance for business investors at present”.