DICK HUGHES AND WNS - A SUCCESS STORY IN REALISING VALUE FROM A PRIVATE COMPANY
Newmarket client, Dick Hughes, who sold his highly successful business, WNS to Independent News & Media in 2006, had had the issue of succession on his mind for several years. Dick has been a client of Gerry O’Reilly and Newmarket Partnership since 1993 and we have acted as his business advisors and auditors ever since. Throughout those fifteen years, and continuing on today, Newmarket has worked closely with Dick to improve the business and develop a valuable and saleable asset.
Dick started his career in the mid 1960s with the Irish Farmers Journal. Identifying ‘on time’ retail availability as essential for newspaper and magazine sales development, Dick introduced a dedicated van distribution network which resulted in rapid circulation growth. Other publishers joined the network and ‘Newspread’ - now Ireland’s premier news distributor – was born. In the early 1970s, as Circulation & Distribution Manager for the newly launched Sunday World, he set up a distribution process especially for the newspaper. This was also a very successful network and was eventually merged into Newspread, opening up the Sunday distribution market for them.At this time, a company called Wholesale Newspaper Services Ltd (WNS) distributed various regional and national Irish Daily and Sunday newspapers in Donegal and Northern Ireland. In 1975 WNS asked Dick to join them and by 2000, WNS was handling all of the Irish national papers and 85% of regional press in NI and Donegal. In 1991, Dick took full control of WNS. In the same year he met Gerry O'Reilly and Newmarket.
“When I was approached by INM, I immediately contacted Newmarket to act as my principal advisors. This involved the review of the operations, preparation of forecast and devising overall negotiation strategy. They ensured that we looked at the bigger picture. Enormous changes were taking place in publishing throughout Ireland, with major cross Channel investment and larger publishing groups getting involved. After due consideration, the offer from IN&M was considered to be the best option for all concerned.”
“ Newmarket worked closely with us in the early years to ensure we had timely and accurate financial information and strong systems. This was of vital importance in keeping a sharp eye on costs and expenditure and of running to a tight budget,” says Dick, “With their assistance and advice, WNS developed and grew. We started to receive sale enquiries from competitors and, at one stage, looked at a Management Buy Out. But Newmarket kept us focused.”
In 2006, when they were awarded distribution of NI’s only evening newspaper, the “Belfast Telegraph”, WNS was soon being eyed up by the Telegraph’s owner, IN&M, as an attractive acquisition proposition. Agreement in principle was achieved after four months and Newmarket restructured the entity to optimise the tax position, negotiated the legal agreements, managed the due diligence process and the completion of the deal.
IN&M purchased WNS in November 2006. Dick comments, “I believe that the advice and guidance of Newmarket was a significant factor in our success, taking us right through the operation for 15 years to negotiations and a successful closure of the sale. Their contribution is much appreciated.”
Gerry O’Reilly comments, “We were very focused on helping Dick achieve his personal as well as professional goals. He is now financially comfortable, has ensured the succession of the business and has a great lifestyle.”
FINANCE BILL: PROPERTY DEALS TO FACE NEW VAT HEADACHES?
The Finance Bill provides for dramatic changes to VAT on Property and these may have dramatic implications not only for transactions entered into when the changes become law, but in some cases for existing transactions! The three most dramatic implications of the proposed changes are:
- Future lease agreements are likely to be more elaborate, containing provisions to protect landlords from possible VAT clawbacks arising as a result of a tenant’s actions.
- Landlords in existing short-term leases with connected parties may face a clawback of VAT recovered on the purchase price.
- Existing leases must be put on a formal basis in order to protect VAT previously recovered.
- Sales of old property will be taken out of the VAT net.
- There will be no distinction drawn between short-term & long-term leases and licences for VAT purposes in future.
- A ‘Capital Goods Scheme’ will be introduced to monitor the use to which property on which VAT has been reclaimed is put to, giving rise to ongoing risk of VAT clawbacks!
If you wish to discuss this further, please
email michael.oscathaill@newmarket.ie or if you wish to attend our seminar on
16th April, please contact
roisin.dunne@newmarket.ie
Places are limited so please book early.
