Guide

How to ensure the assets on your balance sheet are working for you

Gateley Legal

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Welcome to this first post in our 'Building a resilient balance sheet for 2021' series looking at solutions and opportunities for 2021 viewed through the balance sheet.   

In this post we look at tangible and intangible assets: Are you making full use of your assets and, if not, do you really need them?

Disposing of non-core assets can free up cash and also reduce the complexity of a business.  It allows senior management to spend their time improving their core business without distraction. 

What are non-core assets?

  • A non-core asset can be any kind of asset that's not essential to generating revenue and the core business operations of a company.
  • A non-core part of the business that is underinvested including lack of senior management attention. 
  • A non-core asset could be a factory or property that is no longer being used.
  • Non-core assets might also be an entire subsidiary or a holding in another company.

Spotting a non-core asset early will help realise full value rather than when it starts underperforming. Do not let emotions get in the way, divestment should be a strategic tool to focus on the key areas of value in the business. Planning for a sale should typically start at least 6 months before you realise the investment in order to give yourself a good timeframe to achieve the value/result you want. 

How do you find an ideal buyer of a non-core asset?

Does the non-core asset have the potential to stand alone, be used as a platform for a buy and build or have any synergetic potential with any other trades/businesses?

Finding the ideal buyer of a non-core asset can vary depending on where such assets would most likely succeed. Non-core assets can be sold to PE funds, trade and can be acquired by local management by way of a management buyout.  

Depending on the nature of the business a non-core disposal can be more difficult if some of the business (accounts, IP, IT etc) functions are centralised so planning ahead to de-centralise these functions can help achieve a quicker and more successful sale although interim arrangements are often agreed to allow the newly separated business to gradually move across the centralised functions. 

Our second post will look at current assets, especially debtors and stock. 

10 Gateley insights for a resilient balance sheet 

Each week we will be releasing new insight to follow a journey through the balance sheet, with each insight focusing on a new aspect. 

Introduction: How to prepare a resilient balance sheet for 2021
Article two: Current assets: separating the ‘can’t pay’ from the ‘won’t pay’ customer

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