2022 and 2023 brought plenty of ups and downs for UK corporate finance, from soaring inflation to high-profile private equity (PE) buyouts of British brands. These included veterinary pharma business Dechra Pharmaceuticals and events company Hyve Group, as well as widely-publicised unsuccessful takeover bids, such as PE giant Apollo’s attempt with Manchester-based ecommerce giant THG.
According to Refinitiv data, nine UK listed firms were approached by PE firms in the first five months of 2023, exceeding efforts from the same time period in the year prior. The North West outperforming other UK regions in terms of PE-backed deal volume and deal value in H1 gave some business owners looking to exit this year unrealistic expectations of what was achievable for their businesses.
As the UK economy stabilises, there is a glimmer of hope that dealmaking will regain momentum through 2024, and in part boost small-cap and mid-market firms’ position as incubators for growing businesses.
More PE exits, Trade M&A could reopen amongst UK firms
After multi-year lows, strategic dealmaking among UK companies is expected to pick back up as boardroom and UK dealmaker confidence returns. With sturdy fundamentals in several British industries and a recent turn globally towards deals aimed at consolidation and expansion, there are optimistic indicators that domestic trade appetite will persist.
Additionally, after sitting on assets that have been challenging to get away in the past 12 months, private equity firms will look to crystallise returns through exits in 2024. The hope is as market conditions stabilise, financial sponsors should find receptive buyers across the mid-market.
However, with M&A due diligence times lengthening by a median of 24 days since 2021 and corporate finance working in slower investment cycles, it’s important for both businesses and dealmakers to consider the value that a long-term strategic communications strategy can bring to painting a picture of strong cashflow and growth, regulatory compliance and ESG commitments to attract potential investors and buyers.
Regional outfits will challenge London dominance
There have been some big moves in the North recently with A&M bolstering its senior team in Manchester with five new additions to round off 2024. BGF is another great example, despite having a national presence, it’s CEO and senior team are expected to remain in Manchester, creating a real commitment to the Northern corporate finance scene, and showing others in the space that the North, and Manchester in particular, has much to offer when it comes to making those big deals.
In 2024 and beyond, amplifying success stories and celebrating the key wins of regional outfits, beyond the regional business media, that are already rife with these stories, will be key. Regional firms wanting to take on the bigger and London based-outfits need a presence to match it, and that means a PR strategy that can be executed at a national level. If regional, particularly Northern outfits want to solidify the North as a hub of rapid economic growth, it’s not just a great deals strategy that will be key, but also a strategic PR approach too.
Growth of boutique practices
As everyone continues to reevaluate what they want from their work life balance, more corporate finance professionals are moving away from being pigeon-holed into a certain type of work.
As this trend continues, we’re likely to see more boutique firms making big hires and big deals to match and taking on some national names. For firms looking to attract experienced talent, a solid employer brand is key. While national names may have been attractive previously, now it’s the strength of the deals and the company culture that sets practices apart. While word of mouth is key in these areas, the right PR strategy can bolster this and put boutique practices on the radar of top tier talent.
Final thoughts
Corporate finance will never be risk free, and the more risk averse will be keeping a sharp eye on economic conditions in the next sprint to bring down interest rates. However, the hope is 2024 will be bring a more resilient UK for wider dealmaking, allowing businesses to position for recovery and growth after a turbulent few years.