Author: Helen Barklam

Adjusted EBITDA is calculated by taking Reported EBITDA and adjusting for any one-off or exceptional items. It is commonly used in acquisitions with enterprise value (headline price) often based on a multiple of Adjusted EBITDA. The multiple of Adjusted EBITDA paid can vary significantly depending on the desirability of the target company and the sector in which it operates. For example, many technology companies can be subject to offers in excess of 30x Adjusted EBITDA, whereas perhaps a plumbing services business might attract a multiple of 8x. Given buyers pay based on a multiple, fairly small EBITDA adjustments can have…

How to use your pension pot is an important decision which should not be taken lightly. It is important not to rush your decision making and to fully understand and contemplate the various options available. Following pension reforms made in April 2015, the British public have significantly more freedom when deciding how and when to utilise their pension savings. From this point on, anyone aged 55 or over could access their Defined Contribution pension schemes and could choose from five different withdrawal options (or a mixture of some/all options). The five pension withdrawal options Leave pension untouched, letting it…

Mergers and acquisitions (‘M&A’) is a term used to describe the purchase or consolidation of companies or trade and assets. Types of acquisitions Acquisitions either involves the purchase of shares or trade and assets. In a share purchase acquisition, the target entity retains its preexisting assets and liabilities. A trade and assets purchase differs in that the vendor remains the legal owner of the entity, whilst the acquirer takes ownership of some or all of its assets. Depending on the acquisition structure, either a share purchase agreement (‘SPA’) or an asset purchase agreement (‘APA’) is drawn up to facilitate the…

Accrued revenue arises because of the accruals basis of accounting, which states that revenue should be recorded in the profit and loss across the period to which is relates. Where revenue should be recognised but the customer has not yet been billed, accrued revenue arises. The most common example of where accrued revenue might arise would be when providing professional services to a customer, where milestone billing in arrears has been agreed. Accrued revenue is a contract asset. This is because it represents the value of the goods/services that you have already delivered to a customer. It is the value…

Deferred revenue arises because of the accruals basis of accounting, which states that revenue should be recorded in the profit and loss across the period to which is relates. Where a customer is invoiced in advance of when it is appropriate to recognise revenue for goods or services, deferred revenue arises. Deferred revenue is a contract liability. This is because it represents the obligation you have to deliver the goods or service to the customer. Deferred revenue example – accounting double entry To create a deferred revenue balance once an invoice has been raised, the accounting entry is Cr Deferred…

Every investment class has its pros and cons and property is no different. Some of the key advantages of investing in property include the potential for both income and capital appreciation and readily available financing to leverage your capital and boost potential returns. However, it’s not all sunshine and rainbows and this article will look to consider why you might not want to invest in property. High upfront investment Buy-to-let mortgages typically require a minimum 25% deposit. Depending upon where you are trying to purchase, the required deposit will vary. For a £300,000 property, you will need £75,000 plus cash…

Bridging loans are short term (typically 12 to 18 months) secured loans, commonly used by property developers to aid cash flow. Unlike traditional loans where you repay an element of interest and capital each month, a bridging loan is repaid in full at the end of the term. Aside from use by property developers to aid cash flow, other common uses of bridging loans include refurbishment and renovation (particularly on properties which perhaps would not qualify for a traditional mortgage in their current state), purchase of property at auction (where speed of funding is key) and purchase of property where…

The ‘save half your age’ pension rule of thumb is commonly cited by financial advisers. This rule states that when you start making pension contributions, you should halve your age to derive the percentage you will contribute into your pension pot each year until you retire. This percentage refers to the combined contribution of both employer and employee. The rule is intended to simply convey the point that the earlier you start contributing funds into your pension scheme, the more time those funds will have to grow and benefit from tax free compound growth. Consider this simplistic example to illustrate…

Peer to peer lending directly connects investors with borrowers via a peer to peer lending platform. Peer to peer lending platforms aim to provide value to all parties involved. The investor has the opportunity to generate enhanced returns vs. saving cash in banks or other financial institutions. Borrowers benefits from loan capital at competitive interest rates which can be used to fund growth. Meanwhile, the peer to peer lending platform itself generates profit from facilitating this arrangement. There are many UK-based platforms, with each tending to specialise in one type of lending: consumer loans, property-backed loans or business loans. Contents:…