Code Updates: Orbit Launch

Hi 

We're pleased to announced the launching of Orbit on Code-fi.

Orbit is purposefully designed for philanthropy and allows users search over 30m official Companies House records with automated live wealth & capacity ratings. 

On the left navigation bar on Code-fi you'll now notice an expanded section called Orbit, covering:

1. Person Search - search official Director and Person of Significant Control records by name, DOB or location. Find new prospects in an area by just searching a location or postcode. 

2. Company Search - search by company name or number for a full company report with automated company values, precise share values even for minority shares and corporate donation potential.

3. Prospects - add prospects to lists, analyse, edit and export all data for your research. 

For an outline of Orbit, explore the brochure here >

The product is still in Beta, so there's some polishing to do around some of the algorithms and data, with more exciting things to come!

As valued subscribers, please do feel free to ask questions and feedback. We'll also be covering Orbit in the next UK User Group.

Happy prospecting!

Code Updates: Stop Function

Hi

Given the depth of our data and analytics there are occasions where a person search takes a little while to return the results. We are continually working to enhance the speed at which results are returned and additional development to address this is expected in early 2025. 

Following requests from users, we have now added a 'Stop' button in the Person Search tool to enable you to stop a search mid-way into it. This immediately stops the search and allows you to either refine the search criteria or undertake another search.

Thanks

Jon

Code Updates: Additional Search

Hi

We have now added an additional feature to the Companies House Person Search tool.

When researchers are looking for wealth in an area, they may search Chester and find an interesting person they wish to do more research on. Essentially, wanting to explore if they have any other directorships or ownerships

We have now added a new icon that appears next to the name of each result.

By clicking on this it will then open a new tab and searches for any other directorships / ownerships that individual has.

Hopefully this little addition helps!

Thanks

Jon

Ps It was pointed out there were some issues in searching for indivdiuals with doubel barrelled surnames - this has also been resolved!

Code Updates: Corporate Donation

Following a request, Corporate Donation now permits the use of Operating Profit or EBITDA when estimating the annual donation potential of a company.

When using the tool, enter only 1 financial input. The list is ordered with the input which will give the most accurate result at the top (Operating Profit) to the least (Net Assets). You are advised to enter the highest ranked input you have access to.

Thanks,
Jon

Code Updates: Role IQ and Location Data

As we continue to expand the Code-FI specialist roles data set we have now beta launched Location data and Role-IQ in Specialist roles. 

As this is a beta launch we have have only made this available to some selected US roles namely:

• Fund management

• Legal

• Investment Banking

• Hedge Funds

• Private Equity

Role IQ

Role IQ has been designed to support your understanding of different sectors / rules and provide help in role identification. Where you see the Role IQ symbol you can expand the information box to gain additional detailed insights. 

Role IQ provides guidance on:

• Sector Overview

• Role Overview

• Remuneration and benchmark firms

• Key Dates and Times for ask planning

• Key Questions

• Modifier Guidance - to enable further tailored remuneration levels

Location data

We recognise that remuneration varies not just based on role/experience but also which city / town your prospect works in. 

Some of the regional remuneration differences can be quite stark and we are now beta testing the additional location options where there are clear regional differences in remuneration. 

We hope these newly planned features are useful and we welcome user feedback so that we can enhance these prior to a wider roll out.

Thanks,
Jon 

Code Updates: Company House Additions

Firstly, I hope you are finding the Companies House module useful and we appreciate the ongoing feedback users provide us. As you know we are continually developing this resource, both improving existing metrics and adding additional functionality.

As part of this process we have made some further additions to the Companies House Module that are available now.

Speed
Given the sheer scale of the data set and analytics that are used for each search, we are continually striving to improve the speed in which results are generated and users ability to navigate between results pages. 

Having enlisted some external support and made some changes to our database construction we have seen some improvements in speed. We hope to make further strides in a few months to improve it even further. 

Wealth Filters
To compliment the wealth creating and current/non-current role filters we have now launched our Pyro Wealth Filter ©. This enables users to search by postcode / town for prospects who demonstrate emerging, mass affluent or high net worth + characteristics through their director / ownership roles.

The analysis used to derive this is complex and we will be constantly reviewing and improving the algorithms that are used to provide even greater insight. Additional exciting developments are planned for this feature in 2025! 

Clarification on missing data
Where a company doesn't report turnover or profits, results now show NR (not reported) to provide reassurance this data is not available. Additional tool tips on results have also been created, for example showing that dividends are not applicable to directors (unless of course they are also a shareholder!). 

Director Salaries
Following the culmination of a large project, we are now utilising additional information sources within companies house / annual reports to enhance the accuracy of director salaries and where reported, actual director salary. Supported through the construction of additional modeling, estimated / actual director remuneration packages will be enhanced. Please note the enhanced data is being rolled over over the course of the next few months and has already started appearing on Code. 

Data Enhancements
Enhancements have been made to our data / algorithms that better capture remuneration in smaller companies and the impact that shorter time in service has upon pay / bonuses. 

Search Functionality
Prior to commencing your search you now can easily choose between a director or person of significant control (owner) search. Simply select the applicable radio button and hit search!

Upcoming
Company search and Pyro company insights are coming soon…watch this space!!!

As always, thanks for your ongoing support and feedback and we look forward to continuing to enhance the Companies House module over the coming months.

Thanks,
Jon 

Code Updates: New Buy Out Tool integrated into Smart Valuation

Whilst owners can be wealthy on paper, it is only once a shareholding is sold that wealth becomes liquid / realised. Therefore identifying companies where there is more sales activity enables researchers to prioritise prospects. 

Previously Buy Out was a standalone tool that required additional information to use. Following user feedback it was clear some of the information required to fully utilise this tool was hard to reliably establish. 

In order to support additional prospect prioritisation we have therefore redesigned the Buy Out tool, now generating an automated score fully integrated into Smart Valuation. 

Following some additional data analysis and beta testing, every time you undertake a company valuation (Smart Valuation) the Buy Out score is now automatically calculated using the information you would normally input into the Smart Valuation tool. The Buy Out score is also established when creating a Profile for an owner. 

The Buy Out score is driven by a number of broad factors such as:

• Economic conditions

• Company size

• The sector

• Country

The Buy Out score is out of 5. 

The higher the number the higher the M&A / Buy Out / IPO activity there has been in that sector for a company of that size. 

Those sectors where there is limited Buy Out activity would indicate that the near term prospects for a company sale are more limited and have a lower Buy Out score.

Thank you,
Jon

Code Updates: Notepad

As a global resource, we know that researchers have different styles and approaches to their work. With Code-fi we aim to support all these differences.

Some researchers prefer to go into more depth on their prospects, whereas others prefer to keep their analysis top level or quick in a fast paced team.

For those who like to go into more depth, we have Profiles. This allows researchers to build up an overview of prospects wealth, providing automated insights on Career Earnings, Long Term Reward cycles and liquidity.

For those who prefer to keep things more top level, we have added a new Notepad function.

Notepad can now be found on the top right of the nav bar:

The icon circled in red. Bigger image of the icon below:

Click to expand and quickly populate with key sources of your prospects wealth. Add percentages to build your gift capacity, and export your work.

Happy prospecting!
Jon

User group summary: August 2024

Background
In previous user groups and training sessions our focus has been on the wealth accumulated by General Partners at private equity and venture capital firms. However, this session we investigated what the implications are for business owners when being bought out by Private equity or receiving an investment from a VC fund.

We started the session by clarifying that:

• Private equity typically buys entire companies (typically more mature organisations) – with the majority being the purchase of private / family businesses. The purchase price is paid to shareholders (albeit subject to conditions outlined below)

• Venture capital invest money in smaller, high growth firms in return for some equity (i.e. ownership). New shares are created by the business (not sold by existing owners) thus diluting existing shareholders ownership %. The money raised goes into the business to support growth, marketing, R&D etc and does not go to shareholders.

Private equity acquisition types and tax implications
When a private equity firm buys a company, the structure in which the acquisition takes place can have a significant impact upon the tax paid by the owner.

• Asset purchase – the target company remains in force, but some / all of the assets are sold. This is less favourable from a business owners tax position.

• Equity purchase – the ownership of the company is purchased; the company Is closed, and the PE firm will establish a new company (often within a holding company structure). This is the most tax effective sale type for business owners.

How much do owners get when private equity buys a company.
Quite simply they will a package that is equivalent to the value of the business at the time of the acquisition. However, they will often not get a huge cheque for the full value of the business on the day the sale goes through. Many private equity firms recognise the importance of retaining key staff / owners and structure the sale package accordingly. For example, owners might get 50% of the acquisition value up front followed by:

• Rollover requirements – a requirement that they invest some of the acquisition proceeds (i.e. up to 50%) in the new business to ensure they have bought in to the success of the new business.

• And / or Earn outs – the remaining consideration is only paid if certain financial targets (revenue, EBITDA, profit etc) are met. If they are not, met no further payment I made or the calculated on a sliding scale.

What happens to directors when PE completes the acquisition?
Quite simply PE will retain those they see can add value, remove those that do not fit the needs of the PE fir and then appoint new directors – often associated with the PE firm themselves. New / retained directors er incentivised to meet stretching financial performance targets.

What are the different funding rounds that have VC involvement?
The businesses that a VC fund invests in are typically smaller and higher growth, thus riskier.

There are normally four funding rounds undertaken by growing businesses:

• Seed financing – often provided through personal savings, family, and angel investors. Normally up to about 2m, often giving away 10-20% equity.

• Series A – raising 2-15m with a further 20-30% equity dilution for owners.

• Series B – raising between 5 and 50m with an additional 10-25% dilution for owners.

• Series C – raising 20m+ with a further 10-20% equity dilution for owners.

The above figures are typical ranges but can differ depending on the nature of the business / their growth prospects.Note that funds raised go to the company, not to shareholders!

What happens to directors when there is VC investment?
They are often retained, but the board is often expanded to include additional people appointed by the VC fund, who should provide additional expertise / experience to the company.

Directors are normally incentivised to grow the firm through the allocation of additional equity / share options. This is cheaper in the short term for the business, many of which are loss making so paying out cash bonuses are not financially palatable.

What are the signs for VC / PE interest in a company?

• Focus in hot sectors such as biotech, AI, Defence

• Monitor the rapid appointment / removal of directors.

• Enhanced disclosure above regulatory requirements

• Many PF / VC firms focus on certain sectors / types of company.

• Owners have sold previous companies and have a good track record of growing and selling businesses.

• Cash / preference shares / increased equity in the financial accounts.

• Successful company closures

• Scanning the financial / business press

Using Code – valuations and past income

• When applying the above Code-FI can support this analysis by

• Valuing current and previously sold businesses where the sale value was unknown.

• Enables a fuller picture to be gained as estimate income and dividends can also be established.

Finally - please remember that there is NO User Group session in August! We hope you have a lovely summer and we will catch up in September unless we hear from you otherwise.

Thanks,
Jon

Code Updates: Companies House Select All (UK Users)

Hi

Following a request, we have now added the ability for you to select all results on each individual page when using the Companies House Person search.

Where you are confident that all results relate to your prospect, simply check the box at the top and this will add all to your prospect list. Once you have done that, you can click to move to the next page. We have only made the select all function available on a page by page basis.

We continue to make incremental changes to the Companies House Module and additional functionality will continue to be added.

If you have any queries or further suggestions let us know!

Thanks

Code Updates: Companies House (UK Users)

We have now made the Companies House tool available to all UK users. This can be accessed on the navigation bar on the left hand side of Code-Fi.

Many thanks to all of those users who took part in the beta testing and their feedback.

Please note that this tool is still in Beta format and we continue to make additional enhancements. Over the next month or two we will be working on additional filters and also a company search tool. We will of course let you know when these are available.

Following feedback we have also enabled a fixed name search. Where you are certain about the prospects name you can select the fixed name search and enter their name. When undertaking a fixed name search you must also enter one of:

• DOB

• Post Code

• Town/City

Fixed Name Search filters out any records not matching the exact name details entered. This is only recommended where standard name searches are thought to bring back too many similar names. For example, the standard name search may bring back similar record names such as Jon, Jonathan or John, or alternative name usage, such as William and Bill. A fixed name search can also be used where you are confident that the name entered matches exact names used on Companies House.  Note a fixed name search may take additional time depending on how common the name entered is.

If you have any feedback on this tool or Code-FI in general send us an email to team@pyro.solutions

Thanks,
Jonathan

User Group session: Company Valuation

During this month's user group we focused on some of the nuances associated with valuing companies. Whilst there are a number of more quantitative approaches to valuation, that was not the focus of this session .

Our initial discussion focused on why there is a need to value companies. The main drivers are:

• Company ownership is the predominant wealth creation

• Determines how good people are feeling about their financial position (ie if your company is becoming more valuable an individual will become more confident in their wealth)

• It is important to note that company ownership is Illiquid until sold

• Helps understand external investment from PE (ie what % they are gaining when buying in)

Instead of focusing on deriving key financials of a company and analysing reports, researchers should instead use their own judgment and research to establish a more qualitative view about how the company i.e. performing and how sustainable current performance is. As a group we established some key drivers including:

• Management quality

• Strategy

• Growth potential

• Sustainability

• Long term vision

• Reputation

• Good products / service

• Awards / recognition

• Innovative

• Diversity of management and staff

• Meets a need

• Clear product offering

• Barriers to entry

• Supportive economic conditions

• IP

• Customer service

• Clear marketing / positioning

These factors lead to long term value creation, free cash flow generation and profits. These are consequences of having good drivers (ie a profitable company is not profitable given it makes profits, more that profits are a result of good managers and having barriers to entry etc).

We then noted there are multiple technical approaches to valuing a company and that most of these require a substantial amount of data which is often not readily available:

• Discounted Cash flow

• Sustainable cash flow

• Turnover

• Profit (which op, ebitda, net income) Multiples

• Net assets

• Benchmark

We see many people / valuation approaches focused on the use of profits and net assets and we highlighted some of the predominant issues:
Problems of using net income as an input into valuation:

• Accounting profits not cash

• Easily adjusted with things sich as depreciation and amortisation etc

• Not transparent

• Which profit figure to use (there are many different profit figures reported and its sometimes tricky to establish which one is the right one to use!)

Problems of using net assets:

• In some businesses (such as consultancy) all profits could taken out as dividends, such businesses require minimal assets and so on paper the business is valued very low given the absence of any assets

• Reported tangible assets are not where the true value lies in many companies

• Historical

• Probably only applicable for real estate businesses.

When using Smart Valuation we then discussed a preference to focus on turnover and the number of employees, noting code does all the difficult work for you and you are advised to input any data you can access - code will do the rest!

We then quickly discussed some valuation considerations for housing companies, legal/consultancy and engineering companies.

Any questions please get in touch team@pyro.solutions

Thanks,
Jon

Code Updates: CH Search Filters

As we develop and enhance our Companies House functionality we continue to action feedback from our Beta users and add additional tools.

The first update of many is the addition of 2 requested filters.
These filters are:

1. Wealth creating - enables users to filter only those roles that are wealth creating (Directors and Owners)

2. Role Status - allowing users to find prospects who are either currently in role or held a role previously

We welcome feedback on these new features.

Additional filters and functionality are in development and we expect these to be released in the coming weeks.

Thanks,
Jon.

Code User Group Blog: April 2024 Board roles

During this month’s user group we focused on the nature of board roles and how they are remunerated.

As a starting point we established that the board typically consists of:

• The Chairman

• CEO / MD

• CFO

• CTO (if a tech focused company)

• Non-executive directors

• Independent directors

As a reminder the Chairman and non-executive directors whilst not paid significant sums, will have been appointed based on their current / past experience and as such might have significant earnings from past roles. No bonuses or LTRs are typically paid to these individuals.

The Chairman and Non-executive directors are not involved in the operational decisions of the company and sit on the board to provide objective guidance and insight. They perhaps attend 10-12 meetings per year maximum.

The difference between non-executive directors and independent directors is that independent directors do not own shares in the business.

The best paid board roles are the CEO/MD and the CFO. Their pay is made up of:

• Base pay – paid monthly

• Bonus (split roughly 50/50 in terms of cash and stock awards) – paid at the year end

• Long term incentive plans (share awards / options with a required holding period) – awarded at the year end.

For private companies where share awards are not possible, we do see similar overall pay being granted, with all bonuses paid in cash.

Bonuses are based on the achievement of performance targets (financial and non-financial) which can be monitored / tracked when a company issues an interim report. If the company is performing well (established by reviewing the interim report), it is more likely annual performance targets will be met and as such bonus payments made.

We discussed that for most base salaries are ‘allocated’ so cash bonus payments (whilst also being liquid) are also more likely to be available for gifting.

We noted the impact that tax has and for many board members operating in large companies and they will lose circa 50% of their income to tax.

Discussions then moved onto modifiers and role selection. Some key tips we outlined include:
When choosing the sector it is the activity of the business which is the key driver such as someone working in a technology based role for a vehicle manufacturer  - it is the vehicle manufacturing sector that should be selected.

• Sector informs pay levels more than role.

• Management expertise: can positively those who have been in role for longer / have an exceptional track record and lower weightings for shorter tenures

• High company growth is where there is clear evidence the company is performing better than the sector average.

• The use of modifiers is subjective and is more of an art and needs the expertise of the researcher.   Standard is recommended where you are unsure but you could be leaving money on the table if not willing to use modifiers.

As a reminder there is no user group in May.

Thanks,
Jon

Code Updates: Balanced portfolio set to default investment type.

Following feedback from users, we previously created a new savings vehicle option when using Career earnings/Profile mode called ‘Balanced Portfolio’.

For those individuals who have a net worth over 1m, it is likely they will invest in a diversified portfolio as opposed to holding all of their wealth in one asset class (such as cash).

Following research we have established a typical asset allocation for wealthy individuals and created a proprietary returns profile that better reflects the returns that an individual with a diversified portfolio receives. We have called this “Balanced Portfolio”

Following additional research and feedback we feel this is the most applicable default investment type for all prospects. This has now been updated to be the default investment type in career earnings and profile mode.

You can still tailor your results by changing the investments type to the other options (such as property, bonds, equity etc) where required.

Any questions please ask!
Jon

Code Updates: Mid tier / Boutique Inv-Banking Roles

Following client requests received in recent 1-2-1s, a number of potential prospects work at investment banks outside the bulge bracket ones (i.e. Goldman Sachs, JP Morgan etc).

We have therefore added the full suite of roles listed for bulge bracket banks, for mid tier/boutique ones to ensure comprehensive coverage across investment banking.

Banks such as Evermore and Jefferies are in this mid tier category and additional guidance will be provided when key insights goes live hopefully next month.

One interesting thing to note is that whilst salaries for these banks are generally lower, some of the bigger mid tier banks actually pay more than bulge bracket banks, especially at the more junior end of the scale. This might not show in  calibrated average, but it is something to keep in mind and where applicable utilise modifiers.

Thanks,
Jon

Code Updates: Investor relations Roles

Following requests from a few users we have now added a new category of specialist roles: Investor relations.

Investor relations in a large firm is a crucial role as they act as an interface between investors (shareholders and debt holders) and the board. Their job is to manage expectations, ensuring open communication channel are present and responding to requests.

Investor relations roles are not focused on investing funds, making strategic decisions nor involved in operations. Whilst such roles are predominantly present in listed companies, some large private companies do establish such roles where they have a range of diverse stakeholders or might be planning on accessing capital markets (debt or equity) for additional / new funding including an IPO.

Directors of investor relations normally operate just below the main board level.

Data on investor relations roles is now available for Australia, UK and US.

Thanks,
Jon

Code User Group Blog: March 2024 Holding Companies

As spring approaches (well in the UK and US) we tackled the rather tricky topic of Holding companies. As global organisations, private equity and even hedge funds utilise a variety of complex corporate structures, understanding the principles of a holding company and why they are used helps us identify, analyse and track wealth and wealth creation moments.

Whilst I appreciate that in the US and Australia accessing reliable company information is almost impossible, there are still sources where you can gain an insight into corporate structure and financial performance. In the UK we are certainly lucky to have companies house (which is soon to be integrated into Code) which gives us a breadth of information to support prospect research. Whilst initially this might seem the answer, understanding and sifting through such complex structures and information sets presents a challenge.

I initially put forward that a holding company is a king of investment vehicle established to hold the shares of other companies. The holding company itself doesn’t actually generate any products or services and creates no or minimal revenues / costs. There are many reasons for the establishment of a holding company and these centre on:

• Risk management

• Tax

• Business strategy / international operations

• Wealth planning

It is important to note that a subsidiary is a company within its own right and a holding company can own a vast array of subsidiaries either wholly or partially. These subsidiaries might operate strategically to deliver the aims and objectives of a group (Tesco is an example) or be a disparate range of organisations operating as a conglomerate such as Berkshire Hathaway.

When viewing holding company accounts the consolidated accounts is a sum of all the financial elements of each subsidiary. Obviously foreign exchange rates impact this consolidation process but we don’t want to get into the weeds of IFRS standards and hedge accounting! Therefore the consolidation income statement can be seen as the sum of all the holding companies subsidiaries turnover, costs and profits. The same concept applies to the consolidated balance sheet. When analysing the value of holding companies it is the consolidated accounts that you need to focus on.

We then analysed how an individual could be a shareholder of a holding company and a shareholder within a subsidiary. Whilst this is a little confusing and complex to initially understand, it is important to note a shareholder is an owner. Therefore anyone can own part / all of a holding company and also part / all of a a subsidiary and holding company. We discussed the implications this has upon dividend payments and the sale of companies.

Overall throughout all 3 user group sessions, we had some great discussions and questions, albeit perhaps I was slightly distracted due to the egg-citement of getting some easter eggs.

See you in a few weeks for the next user group, which will be focused on board roles.

Thanks,
Jon

Code Updates: Sector Performance

We see considerable impact of different economic/business conditions on the financial/business performance of sectors. 

For example we currently see Aerospace and Defence sector performing well, driven mainly by issues in Ukraine and an increase in global Defence spending. 

At the other end of the scale Housing/construction companies have seen considerable downturns due to interest rate rises accompanies by car manufacturers who have seen falling volumes and growing competition impacting sales. 

To take account of this we have sourced global data and used our own insights/analysis to update the sector performance tool on Code-FI.

To simplify things, we have categorised sector performance into 4 categories: 

1. Booming
2. Affluent
3. Stable
4. Challenged

The attached info graphic also provides a visual snapshot across all of the Pyro sectors:

If you have any questions please let us know.

Thanks,
Jon 

Code Updates: Biotech Specialist Roles

A quick note that we have now changed the categorisation of the new Biotech / Life Sciences roles.

As you know we recently added a large range of additional roles in this sector. In order to make it easier to navigate between these roles we have re-categorised them into 3 sub categories:

• Clinical

• Non-Clinical (ie managerial and admin roles)

• R&D

Thanks,
Jon