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By obtaining accounts from Companies House (specifically 'accounts for a small company'), what are the key figures I should be comparing to see if a company is growing over the number of years?
are revenues/GMs/assets increasing?
You also need to see if increases aren't only due to money being pumped in through loans/share issues.
to buy it? Due diligence of their books with a small business it's easy to make something look like nothing or nothing look like something.
We use the "didn't we do well" performance analysis.
Sometimes its "yeah, we did" sometimes its "nah, we did rubbish"
Then we employ 677 spreadsheets to slam and manipulate the figures so they look kinda reasonable and once reported we often get "could do better, loose some headcount next year" comments from those who are soooo worthy.
HTH's.
No its not to buy the company - its for an interview. I want to ensure the company im attending an interview for showing some sort of growth. Revenue/turnover unfortunately isn't listed on the accounts I can see.
As their accounts are abbreviated and are always upto 2 years out of date you won't learn much.
A small company may have management accounts but they are unlikely to make those available to an outsider.
Why are you interested?
I'd say no hope of doing it accurately, linked in profiles of employees and word of mouth is a good bet. For instance one I know would be bouncing between awesome and terrible due to when the tax year ends or growing nicely if you moved the dates
No its not to buy the company - its for an interview. I want to ensure the company im attending an interview for showing some sort of growth.
Straight up ask them at the interview. It’s a two way process. Judge their reaction rather than the words though
You’ll not find anything of much use in the accounts filed at Companies House. If they are large enough to be audited you may see something on the shareholders report which could be on their website
If they are listed you may find performance figures on investment websites.
+1 for tomhoward; ask about growth projections for next two years, development plans, customer base if B2B.
How long has the co existed? Is it well-established or a relatively recent start-up?
Likely that the a/cs you can see online are abbreviated with total exemption for small co so look at changes in debtors/creditors/shareholder funds.
Take the Dragon's Den approach;
"Hello Dragons. My name's Lisa and I'm asking for £100000 for a 2% share of my company which makes a revolutionary new type of nailbrush. Our sales to date are
Year 1 - sold 50 units @£3.99 per unit at a local farmers market
Year 2 - sold 113 units, including online sales of 3 units.
Year 3 - projection of 2.7 million units, with expansion into Asia and the US and a takeover of L'Oreal."
No, and especially so if it's a PE backed company as it will be leveraged by loans and other debt (loan notes, insititutional shares etc) which will make it potentially look very un attractive, at these levels being cash poor is also not important. Easiest thing for you to do, is ask for the EBITDA for the last 3 years, they should be in no way uncomfortable to give you this. If it's had a recent expansion, you could expect your ebitda to stagnate, or even potentially fall, but as long as it shows growth (over a sustained period) it will show that the company is viable.
Year 1 - sold 50 units @£3.99 per unit at a local farmers market
Year 2 - sold 113 units, including online sales of 3 units.
132% growth YOY isn't to be sniffed at 😉