My advice would be to pre-pack your company, said a business advisor – not the first to suggest this by any means. It has been a challenge for Forte Medical to raise investment through those apparently appointed to provide such a thing to entrepreneurs.

The vast majority of Forte Medical shareholders are friends and family with one industry investor and a sprinkling of footballers and musicians who believe in our work – commonly known as Angel Investors. The sheer number of them are anathema to larger investors but they have remained loyal and supportive over the years.

More often than not Entrepreneurs are funded by Angel Investors, which implicitly means smaller amounts from individuals who support the both the founder and the principles or aims of the business. Those advisers who feel it is acceptable for a founder or business to turn their back on those who have enabled its existence clearly haven’t learned anything about integrity. To my mind it’s a no-brainer that you don’t pull the wings off an Angel.

A pre-pack is an arrangement under which the sale of all or part of a company’s business or assets is negotiated with a purchaser prior to the appointment of the administrator and the sale contract executed on the appointment of the administrator or very shortly afterwards. (Parliament: Commons Library)

My first encounter with pre-pack came from a ‘serial entrepreneur’ who loaned us £30,000 while he spent six months conducting due diligence on the business, continually confirming pending investment. When the company’s bank balance became precariously low, he invited me to a meeting with a friendly administrator, who will pre-pack the business, sell it to me for very little. We’ll get rid of all your shareholders, I’ll give you and your brother some shares and run things from there. I declined.  A winding up order landed on my desk shortly afterwards, swiftly followed by investigations by HMRC and the VAT man who had been tipped off that I was not running the business properly. Our shareholders helped me to repay his loan and, after thorough investigations by both Government Bodies, I was given a clean bill of financial health. Indeed, the VAT man took some Peezy Midstream packs home for his wife, who suffered from regular bouts of Urinary Tract Infection.

Pre-pack has reared its head again recently by four different investment or financial advisors. You have too many shareholders. Let’s pre-pack and start again with you and your brother taking more shares. It will be good for your business and encourage the Venture Capitalists to support you.

Our patient and supportive shareholders have ensured we remain not only alive and kicking, but eminently investable. Protecting their investments from the Vulture Capitalists is non-negotiable. These kind offers to pre-pack have prompted us to “clean up” our cap table with the right legal folk appointed to implement a nominee structure to represent all our smaller shareholders. This will ensure that all our investors will be rewarded as Forte Medical scales and ultimately exits.

Oddly, I am not motivated by the idea of stealing the investment provided by those who have supported my business over the years, leaving them with nothing to show for their trust and faith in my perseverance. Defrauding them would keep me awake at night. And I quite like my sleep. I’m told this attitude is not business-like. I am not being realistic. Forgive me but authorised and legitimised theft and fraud are not part of my personal lexicon of business.

Lack of integrity – or greed – abounds across the business landscape. In July our manufacturer (and shareholder) went into administration; the director who looked after us was texted whilst on holiday celebrating his birthday. To paraphrase the message he received: the company is in administration. You have no job and we’re not paying you for June.

Reading the Sunday papers this morning, I have encountered more examples:

• Private Equity owners of veterinary services with an estimated value of £3bn paying below the living wage, with 80% of staff resorting to food banks and loans to make ends meet;
• Public Sector workers purchasing from Carpetrite with a Blue Light Card were denied delivery of their purchase by the company who bought it from Administration. By default are they not now in possession of that customer’s funds? Presumably that’s not the way business works;
• A woman whose car was impounded by the council but not informed for a whole year – even when she reported the vehicle missing to police – was eventually informed and advised that unless she paid £12-a-day storage (£4,400) for that period, her vehicle would be destroyed;
• Of course, thanks to Andrew Malkinson we now know about the board and lodging cherry on the cake that is miscarriage of justice

I’m sure those reading this can add many more examples to the list.

The problem here is greed, whether Governmental, Corporate or individual. Why are shareholder dividends prioritised above the services they provide and the interests of employees and customers? These are the very people that make the engine work and accelerate company success; yet it is deemed more important to achieve sometimes eye-watering profit over their own wellbeing and the interests of their customers. A happy team member is a productive and loyal team member and a healthy life-work balance will positively impact their performance as well as company success. A happy customer or client will return again … and again.

I read recently about the Banca Monte dei Taschi di Siena, a financial institution whose original tenet was to use profit to the benefit of the citizens of that city, has been shattered by external influences encouraging growth and ultimately greed. This leads me seamlessly into banking. Instead of rewarding its executives with x10 of their already substantial salaries in bonuses, should banks not apply a lesser reward and use at least some of profits to support the towns and cities in which their customers live, work and pay charges, perhaps even eliminating the need for their poor relation the Food Bank? My money sits with a Mutual because its ethos contributes to society rather than bleeding it dry.

Someone once described me as a Utopian, which is not entirely correct although the moniker has merit.  Anyone who has read Utopia will know that contrary to popular interpretation it enjoyed a leadership system, whose inate distate for greed led them to use riches such as gold and precious stones to adorn those deemed to be criminals. Quite simply, the weight of those garments served as penance for wrongdoing, would exhibit them as wrong’uns – and also stop them from moving very fast or very far.

In an era of such intense corporate greed, there’s something quite compelling there …

(c) Giovanna Forte 2024.