Sinéad Heaney, Partner in charge, BDO Corporate Investment featured in The Sunday Business Post and discussed The Employment Investment Incentive Scheme and the opportunities with the scheme for both investors and businesses that can be brought to the next level. Read Sinéad's full extract below:
“The Employment Investment Incentive Scheme (EIIS) plays a really, really important role for Irish SMEs. It supports so many businesses, including well-known brands, to achieve their growth plans” Sinéad Heaney, director of joint venture company BES Management Dac, said.
Heaney, who has nearly 20 years of experience in navigating the current scheme as well as its forerunner the Business Expansion Scheme, analysing the field of SMEs and entrepreneurs and advising investors, says the EIIS is an ideal investment vehicle for business both at early stage or looking to expand. “The scheme is targeting earlier-stage businesses, very much focused on businesses that are less than seven years old or businesses [older] than seven that are looking to invest in product development or looking to expand into new markets,” she said.
As Heaney outlines, 2019 was a notable year for the scheme, as a number of administrative changes were ushered in, chief among them a self-certification model for enterprises looking to sign on and get funded. If there was an element of nervousness in 2019 with those new legislative changes, the long-established scheme was able to absorb them, Heaney said. As is customary at this time of year, BES Management Dac, the joint venture company owned by BDO and Davy will be launching a new fund, the 2020 Davy EIIS Fund in the coming weeks. Last year BES Management raised just over €10 million in the Davy EIIS fund. “But we could have raised multiples of that, as there is very strong demand from investors,” Heaney said. She noted that there are no other tax breaks out there, bar the pension.
The forthcoming 2020 fund will once again be limited to around €10 million with the funds being invested over the following 12 months. “There is huge demand from investors, but we want to make sure we can deliver,” Heaney said. The fund will be invested in between three and twelve investee companies, which involves a lot more than “identifying the company and moving on.” We conduct a very detailed due diligence to ensure each investee company meets the criteria of the fund.”
This year, one of the big questions investors are asking is what impact Covid-19 and the fallout from the global pandemic is having on investment. Or, more to the point, which businesses should they be targeting as the global shift to all things digital is ramped up, and, as we hopefully look forward to restrictions being lifted in the coming year following the introduction of vaccines. “From our perspective, there’s absolutely no doubt that SMEs have been impacted by Covid-19. Raising the fund now, we’re going into the market with the full knowledge of that,” Heaney said. “There are specific sectors that have been hugely positively impacted by Covid.” She said businesses that have been able to adjust and re-align, despite the difficulties heaped on them by 2020, will come out the other side. “We can see that in our portfolio. They’re well funded, can take the knocks and have strong management teams.”
“Going forward, we would see the opportunities in companies working in digital transformation across all sectors. There are huge opportunities with the scheme, both for the investor and for the businesses we can help grow and support and bring to the next level. “The objective with EIIS is that we always leave the business in a better state than we found it and strongly positioned for further growth."
Content adapted from The Sunday Business Post