Corporate Finance

2023: Autumn update

 

Welcome to the FRP Corporate Finance Autumn update. You’ll discover more about our latest activity including the most recent deals, news, sector insights and new team members. Simon Davies provides an overview of the current M&A landscape including current market conditions, the impact of the Autumn statement, sector trends and international interest in UK assets, and Tom Cox shares his thoughts on the latest trends and sentiment in the debt funding market.

Our award success has continued this quarter with notable wins including 'Corporate Finance Team of the Year' at the Insider Thames Valley Dealmakers Awards 2023. We have also celebrated the success of two of our team – Madhavi Morjaria and Edward Jones - who were both named ‘Emerging Dealmaker of the year’ at the Insider Thames Valley and Central and East of England Dealmakers Awards 2023.

In November we welcomed Tim Spooner as a new Corporate Finance partner in our Bristol office. Tim joins us with 20-years’ experience at KPMG.

The latest AICA EMEA regional meeting kicked-off on Thursday 2 November with 60 corporate finance professionals from across our network coming together at the prestigious Sea Containers hotel on the South Bank in London, for a two-day conference focused on cross border M&A and member collaboration.

M&A update

With much of 2022 and the first half of 2023 characterised by high interest rates and surging inflation, it’s been encouraging to see some stability return to the wider M&A market in recent months.

It appears that the base interest rate has at the least plateaued, while inflation has been halved in line with the government’s target, with key input costs such as energy at lower levels than this time last year.

Improving conditions

After a prolonged period of uncertainty this period of economic stability is easing pressure on margins, and encouraging more businesses to consider potential growth and, in some cases, exit strategies. Similarly, from a funding perspective, we’re seeing an increasing number of banks and institutional lenders beginning to return to the table following an understandable period of adjustment driven by the recent debt crisis on the back of the mini-budget of only 12 months ago, which set the UK economy reeling into 2023.

Vendors and investors alike will be banking on this stability continuing into the new year and will have kept a close eye on the Chancellor’s Autumn Statement, which took place just last week.

This year’s Autumn Statement largely sought to instil confidence amongst businesses and consumers, while setting the scene for a potential general election next year. Notable announcements for businesses include an extension to 75% business rates relief for retail, hospitality and leisure firms, a £4.5 billion funding package for UK manufacturers and the permanent implementation to ‘full expensing’ on capital investments in new machinery and equipment.

A minority of businesses will have one eye on the implications that a potential change in government would have for them. This includes those in the private education sector, where a prospective Labour government is likely to increase VAT to 20% on school fees, but appears less likely to make increases in capital gains tax following recent comments by the Shadow Chancellor.

In the context of recent economic pressures a changing of the guard is considered unlikely to have a major impact on operating conditions, with any government likely to want to prioritise continuity and stability to support further economic recovery.

Simon Davies, Partner - Corporate Finance

Recent M&A deals

Debt Market update

Signs of pressures easing but challenges persist

While not without continuing challenge, there has been an increase in confidence over the last six months at the lower end of the mid-market which has accelerated in Q3, with the midterm outlook on interest rates having peaked, and borrowers able to map forward the next 12-24 months with more certainty as inflation begins to subside.

That said, challenges that have persisted throughout this year, such as high input costs and wage inflation, mean this confidence remains somewhat fragile, especially in the context of tepid UK economic growth projected next year and just 1.4% in 2025 according to the Office for Budget Responsibility. While stabilising, interest rates and borrowing costs are also still expected to remain high through 2024, meaning cash flow pressures remain, investment is more cautious but confidence relating to transactional activity in the next 12 months is improving.

In this environment, we’ve been much more focused on refinancing than buyout activity in the last six months. Indeed, many business owners are behind on their growth plans, waiting to see how the market evolves and keeping their options open as it relates to change of control or minority equity investment opportunities. This recent hesitation in deal doing likely points to a busy start to 2024, with signs of significant diligence preparation and reporting being progressed behind the scenes for many corporates as we end the year.

Tom Cox, Partner - Debt Advisory

Demonstrating genuine growth is now the name of the game, with inflation at its most rampant earlier this year - masking some of the stalled volume growth experienced by many businesses in the last 12 months, given weakening underlying demand. So, as inflation stabilises, we will start to have greater visibility of the real winners and losers and who are best placed for success going forward.

Meet our new joiners

Tim Spooner

Tim Spooner

Tim Spooner

  • Partner
  • Corporate Finance
  • Bristol
George Barron

George Barron

George Barron

  • Assistant Manager
  • Corporate Finance
  • Manchester
Ed Cashman

Ed Cashman

Ed Cashman

  • Assistant Manager - Deal Origination
  • Corporate Finance
  • London
Will Joyce

Will Joyce

Will Joyce

  • Analyst
  • Corporate Finance
  • London

Featured

Corporate Finance & Debt Advisory

2023: Summer update

Corporate Finance & Debt Advisory

2023:    Spring update

FRP Corporate Finance annual review

2022: a year in review

 

Are you following our LinkedIn page?