12 months in Corporate Finance

October 2010

Steve Bell
Corporate Finance Associate

Following on from the review of 2009 which saw unprecedented turmoil in global financial markets the last twelve months has seen a level of uncertainty and inconsistency in funding markets, driven by the speculation leading up to the General Election and the ongoing issues surrounding the fledgling coalition.

Over the last twelve months we have seen our work load continue to strengthen but our focus has changed to reflect the challenges facing our clients. As always our primary focus has been to work closely with our clients to support their businesses but as economic challenges continue to arise we have sought to focus our work on guiding these businesses through the difficult discussions with funders and creditors to achieve a sustainable business.

Due to uncertainties in the economy many business owners have sought to reevaluate their aims and we have directed our support to developing strategic plans to focus our clients identifying their long term goals and a plan to work towards these.

Whilst the number of corporate transactions completed has continued at a modest level we are representing more corporate acquirers looking for undervalued assets whether these are represented by unloved subsidiaries of large PLCs or competitors who are struggling.

As the restructuring in the banking sector continues, whether through personnel changes or mergers and divestment, the banks continue to be highly selective in their pursuit of opportunities. Our view is that the individual bank managers are only now becoming comfortable with their own banks appetite for funding whether this is transaction based or for existing clients and it will still take time for these preferences to filter through to the market.

It is likely that the next 12 to 24 months will see a significant number of deals, completed in the last 4 years, being revisited having been completed at a time when bank debt was readily available. Many of these companies now face the prospect of restructuring operations at a time when funding appetite is limited. It is fundamental that Companies face these issues early to ensure a positive result is achieved. Over the last twelve months we have looked at numerous transactions, on behalf of both shareholders and funders, where the funders are facing significant losses. In most cases, where issues are faced early, banks have made the decision to support the businesses.

Whilst the banking sector is going through a period of change the continued support of UK Steel Enterprises and the launch of the £90M Finance Yorkshire Investment Fund will continue to underpin the growth of the local economy.

I believe the next twelve months will continue to deliver a mixed bag of work. As a firm we will continue to focus on adding value to our clients business, whether this is through strategic planning, supporting an acquisition strategies or assisting with restructuring operations.