Scottish Public Finance Manual

Annex A: Business Investment Framework

Summary

1. This guidance sets out the key steps that must be considered when Scottish Ministers are considering an initial or follow-on investment in, or financial support to, private businesses. It forms the basis for developing proposals and, ultimately, a structure for decision-making.

2. The guidance has three key sections:

• the overarching principles that any investment proposal supported by Scottish Ministers should take into account

• the Accountable Officer tests which must be satisfied and the approvals that must be obained prior to any business investment by Scottish Ministers; and

• key considerations that should be taken into account as part of an appraisal of proposed business support, offering more detailed guidance to officials in support of Accountable Officers and Scottish Ministers

3. This guidance is not exhaustive because each investment decision is different and will have its own unique characteristics. It is therefore critical that appropriate advice is taken both from expert staff within the Scottish Government and from the external financial, commercial and legal advisers that might be necessary, depending on the complexity of the proposed arrangement. When considering the use of external advisors, the relevant internal specialists should be consulted to ensure the Scottish Government acts as an informed counter-party. Internal specialists exist within Finance (Finance Business Partners), Subsidy Control (Directorate of  Economic Development) Scottish Government Legal Directorate and Procuement.

4. The Strategic Commercial Assets Division (SCAD) has a team dedicated to assessing interventions. Where there is a business requiring Government support, the division follows a bespoke roadmap which methodically examines the request, drawing on both internal and, where appropriate, external advice. When considering business intervention, the SCAD is available to provide advice and support.

5. This guidance builds upon and consolidates existing guidance and practice within the Scottish Public Finance Manual (SPFM), HM Treasury’s Consolidated Budgeting Guidance and other publications such as HM Treasury’s Green Book. It also reflects experience and lessons learned which have been gained through past investment decisions and the principles of managing public money, ensuring action is carried out:

• in the spirit, as well as the letter, of the law;
• in the public interest, to high ethical standards; and
• with a focus on value for money

Applicability

6. This guidance applies to investment in, or the provision of financial support to, private businesses by the core Scottish Government as well as those bodies to which the SPFM applies. Investment by Scottish Ministers would typically fall into one of the following categories and the principles in this guidance apply to each of these:

• routine investment in private business through a range of established schemes with clearly stated objectives
• investment in or financial support to a specific private business(es) in a reactive manner, in response to, for example, the potential business failure of a business of strategic national importance; and
• Investment in or financial support to a specific private business(es) in a proactive manner, in support of a wider policy objective.

7. In this context, private business is defined as organisations or other entities that are not currently within the boundary of the public sector, as defined by the Office for National Statistics. It includes both for-profit and not-for-profit businesses and should be used for all forms of financial support, including where equity stakes or loans are being considered, both of which will be classified as financial investments.

8. The guidance is also relevant when Ministers are considering taking on financial risk in the form of guarantees or similar instruments that result in a contingent liability in businesses.

9. This guidance is not intended to directly cover grant programmes which have their own procedures for application and award of funding, although the principles will remain applicable to grants awarded to private companies.

Overarching principles

Clear policy rationale

10. Scottish Ministers have set out Scotland’s National Strategy for Economic Transformation which highlights a commitment to building a wellbeing economy through actions to promote entrepreneurship, develop new markets, improve the productivity of businesses and regional economies, develop skills and promote fair work. The wider policy landscape should be considered in all investment decisions. This could include, for example, businesses that have strategic importance to Scotland's economy at regional and national level, sectoral significance, or, links with new/emerging industries.  

11. It is not possible to specify the exact parameters under which Scottish Ministers might or might not invest, including restricting that consideration to specific sectors or businesses, as this would restrict the flexibility of Scottish Ministers to respond in a given scenario. Each must be considered on its own merits and a compelling case presented as part of any overall recommendation, with decisions taking full account of value for money, affordability, classification, legal, subsidy control and Accountable officer considerations.

12. There is an opportunity cost to other spending on Scottish Ministers’ priorities, so ensuring a clear policy rationale (supported by commercial and socio-economic rationale) for investing is of critical importance. This should consider how the opportunity contributes to the aims and objectives set out in the National Performance Framework. It should also include clear and measurable objecives and demonstrate that these could not be achieved with the same impact without the Scottish Ministers' investment. It follows that support from the Scottish Government should only be considered once all other commercial options have been exhausted. Any investment must also include a clear exit strategy as outlined in paragraph 69.

Commercial outcome

13. As outlined above, business support comes with an opportunity cost to other spending on Scottish Ministers’ priorities. Investing also carries the risk of distorting the market(s) in which a business operates and also comes with an element of commercial risk to the public sector. For these reasons, a commercial outcome from any proposed business investment is essential, ensuring an acceptable risk/reward ratio supports the investment of public funds.

14. While there is no specific definition of a commercial outcome (although satisfying Subsidy Control tests is a critical element) the proposal must broadly be within the range that a commercial investor might expect in balancing risk and reward. Identifying what is and is not commercial will also entail wider consideration of, for example, interest rates, broader loan covenants and security. Advice from advisers is likely to be critical in drawing a conclusion, which will include comparisons with deals and/or investments made by private sector investors.

15. When assessing the risk/reward ratio,  the Scottish Government will consider commercial outcomes as well as the wider impact on the public, such as job safeguarding, job creation and future growth opportunities in the sector. This approach is in line with HMT’s Green and Orange Book guidance. 

16. These twin objectives of a clear policy rationale and an acceptable (and positive) risk/reward ratio must therefore be central to the consideration and ultimately the final recommendation on whether Ministers should invest or not.

Proportionate due diligence

17. Any support provided by the Scottish Government and its associated public bodies must be contingent upon the satisfactory completion of proportionate due diligence. The extent and depth of the due diligence will depend on the size, risk and nature of the investment being considered. This is a judgement to be considered by the relevant Accountable Officer.  

18. It is critical that appropriate advice is taken both from expert staff within the Scottish Government – including Finance, Legal, Subsidy Control, SCAD, Procurement and policy areas - as well as external financial, commercial and legal advisers at a level that is appropriate to the complexity and sensitivity of the proposed arrangement. Where a policy area is considering the use of external appropriate advisors, the advice of internal specialists must be sought to ensure the Scottish Government is acting as an informed buyer and is delivering value for money.

Comprehensive business case

19. Any business investment proposal supported by Scottish Ministers must be underpinned by a comprehensive business case. This business case should clearly outline the strategic, economic, commercial, financial and management case for the intervention.

20. A robust business case will include consideration of the following:

• strategic case – Is the Company critical to the Scottish economy and is the proposed support aligned to Scottish Government economic ambitions?
• economic case – In considering the economic impacts of the proposed support, does this represent value for money for the public purse?
• commercial case – Does the proposed support represent a long-term, sustainable solution? Is the underlying business and company viable?
• financial case – Is the proposed support affordable?
• management case – Is the proposed support feasible and deliverable?

Key considerations

21. In support of these overarching principles, this note provides officials with guidance on the more detailed considerations that must be taken into account when making a recommendation to Accountable Officer’s and Scottish Ministers in respect of business investment.

22. The second section of this guidance focuses on the key Accountable Officer tests that are central to the Accountable Officer’s recommendation, with the remainder setting out the other critical areas of consideration necessary to effect a comprehensive view on the proposal. Flow charts, supporting the guidance on the key Accountable Officer tests and other critical areas of consideration can be found in the supporting documents section of the Scottish Public Finance Manual.

Accountable Officer tests

23. Central to the Accountable Officer’s recommendation are the duties set out in s15 of the Public Finance and Accountability (Scotland) Act 2000. The Accountable Officer is directly answerable to the Scottish Parliament, rather than Scottish Ministers, on these duties and must ensure that advice to Ministers and the related process fully considers these aspects. A template setting out these considerations is available for use.

24. The financial accountability and assurance framework and the applicable scheme of delegation in place at the point of investment must be followed and this will determine the appropriate level of Accountable Officer and Ministerial approval required to proceed with the proposed investment.

25. Investments made by the Scottish Government which are of a size and nature as to be classified as novel and contentious must be approved by the Principal Accountable Officer as well as the appropriate Cabinet Secretary and Deputy First Minster/First Minister. 

Regularity of expenditure

26. The Government needs to be able to demonstrate that it has the legal powers in the relevant circumstances to intervene to provide financial support. This is known as Statutory Authority.

27. Any proposed expenditure or other financial commitment will also require to have approval through the annual Budget Act. This is known as Parliamentary Authority and is the normal process through which Ministers gain approval for their expenditure plans. It is also possible to gain this through either of the two annual revisions to the Act that take place during the course of any financial year and there are also provisions for ‘emergency’ expenditure, where it is in the public interest.

28. This is satisfied through ensuring that expenditure (either immediate or in the event of meeting a future contingent liability) is in line with:

• relevant prevailing legislation (i.e. Statutory Authority noted above), where Ministers have powers to commit expenditure. Note that it may be possible, in the absence of specific legislation, to rely on common law powers. Where it is not immediately obvious, advice from the Scottish Government Legal Directorate and/or Subsidy Control Unit is critical to satisfying this test
• the relevant accountability arrangements set out in the Public Finance and Accountability (Scotland) Act 2000 noted above
• Other relevant provisions within the SPFM (e.g. re lending and due process); and
• HM Treasury’s Consolidated Budgeting Guidance (CBG), specifically the budgeting classification of transactions within the National Accounts, and the Financial Reporting Manual (FReM), for the accounting relevant treatment in the SG’s accounts (noting that the budgeting and accounting treatment are not always identical).

Propriety

 29. This is satisfied through ensuring that expenditure and processes uphold the standards Parliament would expect for the use of taxpayers’ money, especially transparency, and that it is compliant with the annual Budget Act (i.e. Parliamentary Authority noted above). A schedule accompanies each annual Budget Act setting out the types of expenditure that may be incurred in each Ministerial portfolio. A key test here is whether the Accountable Officer would be prepared to defend the expenditure/commitment publicly, in particular at a Committee of the Scottish Parliament.

Value for money

30. It is always necessary to demonstrate a sound basis for the use of public money. It will therefore be appropriate to develop a business case or a suitable alternative to set out the options for Ministers intervening and/or taking a financial interest in any business, along with an appropriate economic and financial appraisal of the preferred option(s) (HMT Green Book provides further guidance on options appraisal). This appraisal should take into account the widest assessment of the impact of a proposal as regards economy, efficiency and effectiveness.

31. Furthermore, it needs to be supported by a rigorous due diligence exercise that takes into account an assessment of whether the Government will be acting akin to a commercial investor/lender. This is necessary to fully understand the costs and associated risks and weigh those against the financial, economic, environmental, social and community impact of any proposed intervention. Although value for money assessments can include some subjective elements, they are also a critical part of the process through which an Accountable Officer can demonstrate the sound and prudent use of public money.

32. It is important that, whatever the judgements above imply, the feasibility of the proposal must be considered. Where there is a significant doubt about whether the proposal can be implemented accurately, sustainably, or to the intended timetable it will fail to meet the test.

33. It should be noted that a key test of feasibility is financial sustainability. Accountable Officers must therefore be able to demonstrate the source(s) of all funding necessary to meet the proposal both in the immediate financial year and, where appropriate, beyond in line with delivering a balanced budget. This should also consider the impact of the decision on the classification of the entity and any associated budgetary implications. It is also important to assess how any financial risk proposed affects the general level of carrying risk that Ministers are exposed to, over the period in which it is expected to be carried. This is particularly important if Ministers are exposed to a guarantee or other form of contingent liability, where there may be no immediate exposure, but funds might need to immediately be made available in the event of it being called. Risk-based assessments of the potential for guarantees to be called under various scenarios must be carried out to aid in their valuation. Fees charged for guarantees will normally be held within the Scottish Reserve to provide a basis for responding to future calls.

 34. Where one or more of these tests cannot be satisfied, a proposal will fail to meet the standards expected for an Accountable Officer and advice to Ministers must reflect that conclusion. If Ministers intend to proceed with the proposal in such a case, the Accountable Officer will follow the process for seeking written authority (often known as a “ministerial direction”; SPFM Accountability chapter) from Ministers in line with the AO duty set out in section 15 of the Public Finance and Accountability (Scotland) Act 2000.

Key considerations

35. The issues outlined below represent key considerations that should be taken into account as part of the appraisal of any potential government investment. It should be noted that this list is not intended to be exhaustive given the unique nature of each investment other issues may arise.

36. Lender of last resort - prior to any Scottish Government investment, all other avenues of finance should be explored. This includes (but not limited to): the availability of other or existing government schemes, financing options and private sector support. Any Investment should also consider Government or public sector support already being provided to the business.

37. Subsidy Control – any Scottish Government support for a business operating in a commercial market place must be assessed to determine whether it confers advantage. Ministers will be expected to demonstrate that they are acting broadly in the same way as a commercial investor would in a similar situation – this is known as the Market Economy Investor Principle and is an economic, not legal test. The factors which determine acting commercially can include the rate that is charged on a loan, the term of the loan, lending covenants and security or the fee charged for a guarantee. Detailed advice from Subsidy Control Unit/Scottish Government Legal Directorate is therefore required, where appropriate supported by external legal advice, and always with Financial Management Directorate.

38. Governance – where Scottish Government takes a control of a business, an appropriate governance regime will need to be in place, both in terms of the appointment of a Chair, Board and CEO as well as an institutional framework that is appropriate to the classification status of the body. Unless the business was managed/operated by an existing public body, sponsorship arrangements might also need to be arranged, either through an appropriate Agency/NDPB specialising in the sector or directly by a policy team in the core Scottish Government. In part, governance will need to be influenced by the size of any shareholding, in the event of equity purchase. Note that the ability to appoint the Directors of a company is a significant factor in determining classification status.

39. Security of investment – where it is appropriate and feasible, Ministers should mitigate the risks of loss through appropriate security over assets, parent company or other guarantees that provide the basis for full or partial recompense in the event of a business no longer being able to meet its financial obligations to government. Security is not only an important part of the overall test of whether the proposal is commercial in nature but also forms a critical part of financial risk mitigation for ensuring the appropriate use of taxpayers’ money, as well as the Propriety considerations in the Accountable Officer tests. Obtaining legal and commercial advice (either internal or external) is crucial to ensuring that the maximum level of security has been obtained.

40. Return on investment – any proposed investment should be able to demonstrate a potential return commensurate with the risk associated with the proposal. Equity invested in a business or any lending would normally be expected to provide an appropriate commercial return to satisfy the appropriate Subsidy Control considerations.

41. Risk Exposure - the assessment of the commercial aspects of the proposal must include consideration of commercial risk. This will form a key part of the due diligence process undertaken in support of the investment. The risk of a transaction is to be considered in light of the overall risk profile of the Scottish Governments existing Investments. The risk exposure should be monitored both at the time of a transaction and throughout Scottish Government involvement.

42. Due to the nature of the investments covered by this guidance, the level of risk is greater than most routine public spending. As such, Scottish Ministers must consider the risks of each investment against prevailing risk statements that have been developed in line with the Risk Management section of the SPFM. It is crucial to document the key risks and their short/long-term implications for Ministers. Corporate risk registers must be updated accordingly and the strategy to mitigate & manage those risks must be clearly documented.

43. The business case should analyse and quantify the potential risks and expected outcomes as a result of the investment including a cost/benefit analysis of different options.

44. Scottish Ministers’ maximum potential financial exposure must be estimated. Assumptions should be subject to sensitivity analysis to understand the potential impact of changes to assumptions on the financial viability of the investment as well as the potential financial exposure of the investment.

45. Pensions – it is possible that there may be pension liabilities or a general deficit that a business cannot currently meet due to its existing profitability and/or cash flow arrangements. Where government takes majority control through equity purchase, very careful consideration is required of the extent to which such liabilities might then fall on government both in the short term and over the longer term, including guarantees that might need to be provided to scheme administrators. Potential costs here must be fully taken account of as part of the overall value for money case, as well as general affordability considerations.

46. Taxation – existing arrangements for taxation (in particular VAT) cannot be taken for granted and need to be investigated fully to understand the potential impact. The Scottish Government is, through Revenue Scotland, a tax authority and has set out principles regarding taxation which may not sit with the way in which the business has operated in its tax affairs, potentially bringing additional financial exposure.

47. Shareholders Agreement - where shares in an entity are being acquired and SG is not the sole shareholder, consideration should also be given to a Shareholders Agreement to act as an additional level of assurance that the taxpayer’s investment is being afforded maximum protection. This would include, for example, the rights and obligations of the individual shareholders, regulation of the sale of shares and how important decisions are made. Advice from both Finance officials and legal and commercial advisers should be sought to ensure the most robust arrangements possible.

48. . National accounts classification – intervention in a business always carries the risk of altering the perceived or actual balance of control over its operations. For example, where Ministers take an equity stake, this might result in achieving effective control even without a majority shareholding. This has the potential for the business to then be viewed as a public sector entity, where it is deemed that Ministers have of control (which need not necessarily be viewed simply through financial control). It is therefore important to consider whether government intervention and/or support might alter the classification status of an entity in the National Accounts from the private sector to the public sector. Any such change is likely to carry significant budgetary implications because of the way in which its financial transactions are subsequently classified. Assessments should be in line with the latest European System of Accounts (ESA) standard and the associated Manual for Government Deficit and Debt (MGDD), and might require Finance officials to engage with HM Treasury and the Office for National Statistics. For further guidance on classification please consult your Finance Business Partner.

49. Public body duties – careful consideration needs to be given to the implications for businesses that are brought into the public sector through majority control (or other circumstances) relating to the requirements of public bodies. This includes areas such as public sector pay policy, Ministers’ policy on redundancies (with consultation with HR), procurement of good and services, ability to borrow and the holding and deployment of reserves. It is therefore important to consider fully the duties imposed on public bodies and their applicability or otherwise to the business. It is important to note that Ministerial approval is required to establish any Public Body. Further guidance on specific considerations is available on the Public Bodies Saltire page.

Budgeting and accounting

50. It is important to fully explore the budgeting and accounting implications of a proposal before final decisions are taken. Advice should always be sought from Finance officials to ensure that costs associated with any initial or later investment are considered against the resource, capital and financial transactions budgets. HM Treasury’s Consolidated Budgeting Guidance sets out the budgeting treatment for loans, equity and other forms of investment, as well as the implications of taking on contingent liabilities that might result in expenditure at a later date and how write-downs or other revaluations impact on the SG’s budget. The accounting treatment and carrying value of investments should also be considered in accordance with International Financial Reporting Standards as applied in the public sector, in particular, the application of International Financial Reporting Standard 9 (Financial Instruments), for the purposes of reporting in the SG’s consolidated accounts.

51. Further advice in respect of the requirements when entering into contingent liabilities, including guarantees and indemnities, can be found in the Contingent Liabilities section of the Scottish Public Finance Manual. These must be reported to SG Finance when entered into and an update provided every six months to ensure these are appropriately disclosed in the Scottish Government’s annual accounts.

Reporting and Disclosure

52. Legislative and parliamentary considerations – the provisions set out in the Companies Act need consideration to ensure compliance both during any in the acquiring of any financial interest in a company and during its full or partial ownership, if that is the proposed course of action. Special considerations are needed if the company is listed and so appropriate legal advice will be critical throughout.

53. Parliamentary Written Agreements - it is also important to respect agreements with the Parliament in dealing with businesses. Provisions exist for the specific approval of financial guarantees, indemnities, letters of comfort and other forms of contingent liability by the Finance Committee and these must be respected fully in advance of any agreement being reached. Consideration should also be given to exposing the proposal to the Committee if the financial risk/exposure is deemed high. The Accountable Officer, as well as Ministers, must be prepared to explain the proposal. In most cases, Parliamentary sessions will likely be heard in private because of commercial considerations.

54. Disclosure and commercial sensitivity – in any intervention, officials should be fully aware of the commercial sensitivity of information about a company. Examples could be price sensitive information, information that may be subject to existing confidentiality agreements or information that may impact on the future commercial prospects of the company. It is important that the Scottish Government is able to act as a trusted and credible investor in commercial situations as failure to do so may impact on its future ability to operate effectively in the commercial sector in the future. Where government has intervened in a distressed company, the risks are greater as disclosure has the potential to affect the level of confidence that suppliers, customers, lenders and other relevant parties have in the business and so increase the potential for decisions that might increase that risk further, putting in jeopardy the investment taxpayers are making in a business.

55. There is a public interest in disclosing information about the use of public money and the Scottish Government must be as transparent as possible with internal and external stakeholders. There is also a specific public interest in protecting the investment of public money by ensuring that a level playing field in commercial competition is not distorted by disclosure of information which would be adverse to the commercial interests of a company in which public funds have been invested.

56. Pro-active publication of information should be considered and will be a necessary consideration in relation to the Scottish Government’s Annual Consolidated Accounts but there is no fixed set of information that should be published. Any decision to make information available (particularly detailed information) should take cognisance of the legal and commercial context and balance the prospects of the business with the benefit of being transparent to Parliament and taxpayers. Consideration also need to be given to the provisions set out in the Freedom of Information (Scotland) Act 2002: how pro-active publication may assist in aiding understanding of the investment decisions made by Ministers and also responsibilities under the Act to not release information which would be subject to exemptions, for example the personal data of third parties, or, where disclosure of information about a company’s financial structure would not otherwise be in the public domain and could prejudice its commercial interests. It is particularly important, however, to give cognisance to the risk of disclosing detailed terms that would then place the government at a disadvantage in any future commercial negotiation as to do so could substantially weaken the ability to secure value for money for the taxpayer. Additional guidance on Freedom of Information requests is provided as Annex B.

57. Disclosure should be with the prior knowledge and, where possible, agreement of the company in question. As noted at the outset of this guidance, all officials and associated advisers involved in transactions must be asked to declare financial or other associated interests that may be relevant.

58. External Audit/Advisors - appointed advisors and external auditors who are privy to details of such transactions, must also be alert to these disclosure considerations.

59. Re-evaluation over time - it is also worth noting that the sensitivity of information is likely to change over time, allowing previously withheld information to be made public.

Decision-making process

60. Ultimately, decisions on the use of resources will be made by Scottish Ministers. To support a decision on a specific proposal, officials will engage with appropriate policy and expert colleagues within the SG and obtain advice and conduct due diligence and investigations as appropriate in order to provide advice to Ministers that fully explores all of the relevant considerations. This will include ensuring that the company is in good standing and that their practices conform with Ministers’ standards and policies (for example Fair Work and Human Rights guidance).

61. In interacting with private businesses, there is scope for civil servants involved in investment decisions to experience a conflict of interest, financial or otherwise. It is therefore important that all officials (and as a matter of course advisers) declare and record these at the outset and, where appropriate, withdraw from future involvement, if deemed appropriate by the Accountable Officer, in discussion with Financial Management Directorate officials.

62.  If it is deemed necessary to use external advisers in the transaction e.g. at options appraisal, or to perform monitoring and evaluation then procurement guidelines should be followed to obtain this support.

63. If the Accountable Officer tests cannot be met the advice must set out why and recommend that the proposed action does not proceed. As noted above, if Ministers intend to proceed with the proposal in such a case, the Accountable Officer will follow the process for seeking written authority (Often known as a “ministerial direction”; SPFM Accountability chapter).

64. Good record-keeping documenting each stage of the process is important throughout, particularly where commercial discussions and negotiations continue over a prolonged period. In particular, it is important that there is a clear and auditable trail leading up to and supporting decision-making (for example, covering the commercial discussions/negotiations around all the options considered, the evolution of the positions of the parties and the associated advice and consideration).

65. The types of business investments considered by this guidance note are often complex and can develop at fast pace. Regardless of the situation and circumstances surrounding an investment decision, it is critical that consideration is given to these Business Support Principles, that decision making is appropriately documented and that due process is followed.

Monitoring and management

66. Approved investments must be underpinned by a robust monitoring regime to ensure the protection of investment and oversight of the changing nature of the financial risk to which taxpayers are exposed. There should be regular monitoring checks on at least a quarterly basis to ensure that good management arrangements are in place, the business case remains up to date, and there is an active plan to secure benefits associated with the intervention. It will be necessary to evaluate the carrying value of the investment using prevailing accounting standards. This is to be led by relevant policy areas and supported by Finance officials.

67. Every decision to invest must be accompanied by a robust management plan. This will include ensuring there are adequate sponsorship arrangements in place to manage the asset. Where there are any additional investment, the original business case must be revisited to ensure the new requirements meets investment criteria. The business case must be updated to reflect the new position including the financial impacts this may have.

Evaluation

68. Investments must be subject to periodic implementation evaluation. The extent and timing of an evaluation will depend on where the Investment is within the life cycle, the scale of the investment, as well as any unique attributes. The economic impact should be understood and every investment should be subject to a full outcome evaluation in line with HMT’s Magenta Book. The requirement for an evaluation should be reviewed on an annual basis.

Exit arrangements

69. Where public funds are tied-up in an investment, they are not then available to support the delivery of general public services. It is therefore important for Ministers to have a view, at the point of investment, on their long-term aspirations for the entity in question and the terms of the investment should reflect the length of time that Ministers then expect to hold it, in whole or in part. Where possible, potential exit strategies must be identified and subject to periodic review. Officials must ensure there are periodic review points at which the SG and the entity formally review the need for Ministers to hold an investment where there is no defined exit. These review points should consider performance against the initial strategy. In addition as well, timeframes and, if circumstances change, it will be necessary to perform a reappraisal of the investment. Exit strategies should be accompanied by a benefit realisation plan to secure value for money outcomes.