Category: Funds

Equity
ArticlesFunds

Best Private Equity Investment Group – East Asia

Equity

AEI Capital is passionate about dealing with the capitalization of corporate vision. It knows that anything is possible with the correct strategy alongside a smart capitalization model and a knowledgeable blueprint for the most effective, essential parts of the Private Equity industry. Looking to nestle itself within the industry as a great business to work with for the global capitalization and re-stratification opportunities of the modern world. Here we look at the industry as AEI continues to grow.

AEI Capital is a Private Equity (PE) firm with over 20 years of accumulative experience. With over 500 Million USD of Assets Under Management (AUM), it is growing exponentially and with great tenacity.

PE is a financial approach that helps companies to acquire funds from firms or accredited investors instead of stock markets. It makes a direct investment that doesn’t depend on stocks as the PE industry offers equity stakes in businesses that aren’t listed. This global market is something to be tapped into by investors.

The goal of PE investments is to create a space where each business can grow rapidly, so that it can go public or become recognised by a larger company. In exchange of this investment, investors are benefitted by huge shares of improved profits that allows them to also become part of the company’s shareholders. All of this means that companies can reap the rewards of larger funds without having to fundraise via public listings or acquire business loans. Investors look for PE so that they can earn more than what can be achieved in public equity markets.

In the present times, PE refers to a variety of subcategories within investments that are all connected via the process of raising funds from private investors. Venture capital is one of the most important strategies that aids the start-up of a business and helps to provide it with the ability to evolve early. It is mainly concerned with technology firms with ideas and products that are moulding the modern way of life.

We have recently seen an explosion of alternative data sources that rely on collection and scraping processes. Traditional data can include investor presentations, SEC filings, financial statements, and press releases. However, alternative data includes externally sourced factors such as company size, location of HQ and branch offices, website traffic, reviews, employee salaries, organizational structure and more.

Over the next decade, it is predictable that we will see even more advancements in the industry and harvesting of data as we see more in-depth machine learning through the studies of algorithms that can solve new problems without humans having to program them. PE firms are using machine learning to analyse and evaluate investment opportunities that help them to discover better investments for the future. Machine learning plays a crucial part in the future of PE as it substantially improves the efficiency of opportunity analysis.

With automated data comes higher levels of efficiency and the expansion of the tools used to improve the process. These tools generally mean less mistakes are made, and a lot of money is saved. As technical challenges arise it is most important for us to move away from the human bias against technology, as with this tool it is more possible to feel the benefits and keep up the pace within the industry.

As AEI continues to work with tech scalable businesses and it is able to aid the growth of businesses by means of technological developments. It focuses on three levers of the capital force such as capitalization, strategy, and digitalization to ensure a wide scope of growth.

With regards to COVID-19, many industries have had to implement remote work strategies very quickly. This increased the rate of virtualization of a selection of PE procedures. With more meetings, decisions, and deals happening online, the pandemic has meant that remote work and virtualization has been entirely helpful and is never going to return to the normal amount, as things have actually been more positive this way than imagined before.

Continuing through 2021 and beyond, virtualization of the workflow will help to remove the barriers set by distance. It also reduces unnecessary administration as moving towards remote work, we learn to recognize which procedures or documentations are nonessential and even redundant. All of this leads to improved efficiency and sustainability for PE firms.

AEI understands every business as a continuously evolving living being that needs to be nourished and taken care of. It helps businesses to thrive and build on what they already have as well as giving them further life after they may have collapsed.

Intending to reach a target in the Greater China Region or Southeast Asia, AEI is aware of the “new economy” that is a combination of globalization, information technology, and the communication revolution. This applies to all high growth industries such as internet, financial technology such as e-commerce, O2O retail, renewable energy, AI, Cloud-based technology, healthcare, education, and other consumer-driven, big data or digitally enabled properties that ensure the capitalization of global trends. According to AEI these characteristics allow businesses that follow global trends to grow and adapt along with the industry changes, pandemic or not.

Overall, AEI Capital offers the best solutions and services to its customers that are based all around the world. It has adapted swiftly to any problems that have arisen due to the global pandemic, and it is picking other businesses up with its viable solutions.

For further information, please contact John Tan or visit: https://aeicapital.com/ 

Inheritance Tax
ArticlesFinance/Wealth ManagementFunds

Inheritance Tax Receipts Reach £4.1Billion in the Months from April to October 2022

Inheritance Tax

Figures out from HMRC this morning show that the Treasury raked in another £4.1billion in inheritance tax receipts in the months between April and October 2022. This is £500 million more than in the same period a year earlier, continuing the upward trend. These figures are revealed just days after the Autumn Statement in which it was announced that the inheritance tax threshold of £325,000 will be frozen until April 2028.

These new figures demonstrate just how much the government’s inheritance tax take seems to be increasing without the need for any more freezes, thanks largely to the steady increases in house prices which are pushing more regular hardworking families above the threshold who are relying on money being passed down through the generations.

While the average bill is currently £216,000, research conducted by Wealth Club shows just that with this extended freeze combined with rampant inflation, average inheritance tax bills are conservatively estimated to reach £297,793 by 2025-26 and £336,605 by 2027-28.

Alex Davies, CEO and Founder of Wealth Club said: “There has been a total U-turn on inheritance tax over the last few months. From Liz Truss raising the hopes of the nation with a cut back in September, and now Jeremy Hunt announcing the extension of the freeze until 2028. This is another stealth tax and the case of the boiling frog is apt. The treasury hopes by leaving rates and allowances unchanged, inflation can do the hard work of turning the temperature up on tax payers without them noticing.

Contrary to what many think, inheritance tax doesn’t just affect the super-rich. It will be the thousands of hardworking families that will bear the brunt. Rampant inflation, soaring house prices and years of frozen allowances will magnify the tax take in the years ahead. More and more families are going to find themselves hit by death duties they might not expected or planned for.”

 

How inheritance tax is calculated

  • Inheritance tax (IHT) of 40% is usually chargeable if one’s assets exceed a certain threshold, after deducting any liabilities, exemptions and reliefs.
  • The threshold (nil rate band) has been £325,000 per single person since 6 April 2009 – and will stay frozen at this level up to and including 2028-29.
  • There is an additional transferrable main residence nil rate band of £175,000 available when passing the family home down to children or other direct descendants.
  • Any unused threshold may be transferred to a surviving spouse or civil partner. So, a couple could currently potentially pass on up to £1 million before IHT might apply.

“The good news is that with some careful planning there are lots of perfectly legitimate ways you can eliminate or keep IHT bills to the minimum, so more of your wealth is passed on to your loved ones rather than being syphoned off by the taxman.”

 

1. Make a will

Making a will is the first step you should take. Without it, your estate will be shared according to a set of pre-determined rules. That means the taxman might end up with more than its fair share.

 

2. Use your gift allowances

Every year you can give up to £3,000 away tax free. This is known as the annual exemption. If you didn’t use it last year, you can combine it and pass on £6,000. You can also give up to £250 each year to however many people you wish (but only one gift per recipient per year) or make a wedding gift of up to £5,000 to your child; up to £2,500 to your grandchild; up to £2,500 to your spouse or civil partner to be and £1,000 to anyone else. Beyond these allowances, you can pass on as much as you like IHT free. So long as you live for at least seven years after giving money away, there will be no IHT to pay.  

 

3. Make regular gifts

You can make regular gifts from your income. These gifts are immediately IHT free (no need to wait for seven years) and there’s no cap on how much you can give away, provided you can demonstrate your standard of living is not affected.

 

4. Leave a legacy – give to charity

If you leave at least 10% of your net estate to a charity or a few other organisations, you may be able to get a discount on the IHT rate – 36% instead of 40% ­– on the rest of your estate.

 

5. Use your pension allowance

Pensions are not usually subject to IHT for those under 75 years old – they can be passed on tax efficiently and, in some cases, even tax free. If you have any pension allowance left, make use of it.

 

6. Set up a trust

Trusts have traditionally been a staple of IHT planning. They can mean money falls outside an estate if you live for at least seven years after establishing the trust. The related taxes and laws are complicated – you should seek specialist advice if you’re considering this.

 

7. Invest in companies qualifying for Business Property Relief (BPR)

If you own or invest in a business that qualifies for Business Property Relief – the majority of private companies and some AIM-quoted companies do – you can benefit from full IHT relief. You must be a shareholder for at least two years and still be on death though.

 

8. Invest in an AIM IHT ISA

ISAs are tax free during your lifetime but when you die, or when your spouse dies if later, they could be subject to 40% IHT. An increasingly popular way of mitigating IHT on an ISA is to invest in certain AIM quoted companies which qualify for BPR. You must hold the shares for at least two years and if you still hold them on death you could potentially pass them on without a penny due in inheritance tax.

 

9. Back smaller British businesses

The Enterprise Investment Scheme (EIS) and the Seed Enterprise Investment Scheme (SEIS) offer a generous set of tax reliefs. For instance, SEIS offers up to 50% income tax and capital gains tax reliefs, plus loss relief if the investment doesn’t work out. But EIS and SEIS investments also qualify for BPR, so could be passed on free of IHT. 

 

10. Invest in commercial forestry

This is an underused option for experienced investors. Pension funds and institutions have long ploughed money into forestry. The Church Commissioners has a forestry portfolio worth £400 million. Commercial forest investments should be free of IHT if held for at least two years and on death.

You should also benefit from capital appreciation in the value of the trees (and the land they are on) and from any income produced by harvesting the trees and selling the timber (this income may also be tax free).  

 

11. Spend it

One sure-fire way to keep your wealth away from the taxman’s hands is to spend it.

 

Key IHT stats

  • One in every 25 estates pay inheritance tax, but the freeze on inheritance tax thresholds, paired with inflation and decades of house price increases is bringing more and more into the taxman’s sights. 
  • While you can pass on money IHT free to your spouse or civil partner, the estate could still be subject to IHT on their death though they may be able to make use of your pass-on allowance.  
  • The main threshold is the nil-rate band, enabling up to £325,000 of an estate to be passed on without having to pay any IHT. This has been unchanged since April 2009.
  • There is also a Residence Nil Rate band worth £175,000 which allows most people to pass on a family home more tax efficiently to direct descendants, although this tapers for estates over £2 million and is not available at all for estates worth over £2.35 million.
  • Wealth Club calculations suggest the average inheritance tax bill could increase to just over £266,000 in the current tax year. This is a 27% increase from the £209,000 average paid just three years ago. 
Accounting
ArticlesFunds

Buyer Beware: The Hidden Costs of Changing Your Accounting Software and How to Avoid Them

Accounting

By Paul Sparkes, Commercial Director at award-winning accounting software developer, iplicit.

Sometimes, if you get a decision wrong, you’re stuck with the consequences for quite a while. You’ve spent substantial money to get where you are and, for the time being, you have no choice but to spend more.

It can be true of accounting software. Before your new system has even gone live, you might realise it will not do everything you need unless you spend significantly more than you budgeted.

But it’s rare for any business to perform a U-turn in that situation. Even if the new system hasn’t arrived, the business is probably too far into the process to change course without a lot of pain and expense. And the person making that decision may feel weakened in their own organisation if they announce they’ve made a mistake.

With all the costs and time involved in implementing a new system, it’s not a process that most people will want to go through again soon. So it’s important to watch for those hidden costs from the outset.

 

When ‘cheaper’ costs more: what are the hidden costs?

We could do without unpleasant surprises when making a major purchase. But it’s rarely as simple as comparing price X with price Y. And for the enterprise-level accounting packages, you won’t get a useful idea of price until you’ve started a detailed conversation anyway.

There are a host of factors which can result in the apparently ‘cheaper’ option costing more. And if you’re unlucky, a salesperson who senses you’re quite cost-sensitive might feel no obligation to point them out to you.

 

Here are some key issues to consider:

Scope creep: A vendor could offer you a fixed cost for the implementation of new software. But whether it’s £20,000 or £100,000, it is likely to be tightly aligned to a scope document which sets out what you’re getting. If you need something outside that package, it runs into money – that’s scope creep.

If you ask for the software to do something that wasn’t covered, you could be looking at several days of development work, and that £20,000 project could soon be costing £25,000.

Adding functionality: A lot of accounting software is modular – meaning you pick a basic package and then add the other “modules” you need before arriving at a final price.

You need to be wary of assuming something is included in the base-level product. If it isn’t, you could be adding thousands of pounds a year for those extra modules. An example might be an application for expenses: does it come as standard?

Scalability – adding users: Will your finance software keep up when your business grows? How many users might you need to add to the system if things go the way you hope? And what will that cost you?

Scalability – adding entities: Perhaps phase one of your software implementation involves a single company, but you’d like to add other businesses to your group later. You’ll probably have considered that as an issue – but what about adding businesses you might launch or acquire later on?

Scalability – adding entities outside the UK:  This is where the costs can really mushroom. Perhaps you buy an operation in the US or Canada and your software provider wants to charge you a fortune to add this overseas entity to your system. If that happens, you may have little choice but to absorb it as a high, unexpected cost.

Integrating with other systems: This is another issue that’s likely to increase in importance as you grow and acquire other businesses. If you have systems for inventory, stock management, timesheets, expenses, membership fees, or a host of other things, will they talk to your accounting software?

If this specific application of yours is one that’s commonly available in the marketplace, then most accounting packages will be able to integrate it into what they do. But if it’s a bespoke product that didn’t previously need to integrate with anything else, you could be in difficulty.

If you do have bespoke needs when it comes to integration, look for software that makes use of open an open API (application programming interface – the way different computer programs speak to each other). This means it fits together with other systems easily and flexibly. So if you acquire a legacy system as you expand, or you want to do something that’s new for your business – selling at the click of a button online, for example – it can be integrated easily, in ‘plug-and-play fashion.

Archiving: You’ve got a lot of information in your existing system about past transactions – and it needs to be available to auditors for seven years. So what happens when you’re changing your software?

You could keep your old system going alongside the new one, perhaps in a ‘read-only version – which will require you to keep paying for licences.

Alternatively, you could export all that data from the old system, into Excel, or CSV files.

That’s fine, but it becomes a hidden cost if the auditors need to audit that data alongside the new system – potentially adding days to the auditors’ work, and therefore a massive extra outlay for you.

 

How to avoid those hidden costs

As you’ll have gathered, the key to avoiding unwelcome surprises is to ask the right questions.

Few businesses go into the same level of detail as public sector bodies, with their comprehensive tender documents and Requests for Information (RFI). But if you want to avoid getting burned, you need to be as clear as possible about what you’re buying.

Spell out your requirements as precisely as you can and get the offer locked down.

It’s wise to get the right stakeholders involved as well so that key people from all the departments which will use the system and will have input. You don’t want them spotting the system’s shortcomings after the contracts have been signed, when fixing them will be impossible or costly. 

Of course, it’s easier if the software has been structured to include as many features as possible as standard.

The upside of all this is that while there are hidden costs to watch for, there can be ‘hidden’ benefits.

If a good software package frees up time which can be spent more productively, it can help you improve and grow the business. Which, after all, is what we’re all at work for.