Corporate Finance Lunch Review

By pro-manchester comms manager, Mel Hill

pro-manchester’s Corporate Finance Lunch welcomed a sold-out crowd to The Midland Hotel on Thursday 14th February. Who says romance is dead?

The event, which we’ve been proudly hosting for over 10 years celebrated Manchester’s best deals with representatives from The Big Four in the first panel.

Hosted by Jo Birtwistle, our first panel welcomed Jonathan Boyers – KPMG, Mark Clephan – EY, Daniel Wright – Deloitte and Sid Hussain – PwC.

Brexit was the buzz word, as expected with our panellists discussing life after “the B word”, as put by Daniel Wright.

As Manchester has the largest amount of private equity houses in the country, including London, Daniel, Deloitte’s senior transaction services director believes Brexit will delay deals, but not deter them.

“Any uncertainty on the investment process, whether it’s no deal or whatever, will actually drive a large volume of deals. The issue is just that nobody wants to be the person that writes a cheque before Brexit with the uncertainty surrounding it.

“I don’t think Manchester has anything to worry about. The north west continued to grow, despite the rest of the country. I believe this is driven by the number of people employed in private equity here.

“A mixture of the north west economy and access to world class talent in Manchester with our top universities has been hugely helpful. It’s amazing that 50% of our graduates are choosing to stay in the north west. This is definite evidence of good talent staying here,” said Daniel.

Mark Clephan, corporate finance partner at EY continued the positive outlook on our country’s current economic unrest.

“When we sat here last year [at pro-manchester’s 2018 lunch], we were saying similar things surrounding the risks around Brexit. If we continue to bring this up, we risk talking ourselves down.

“Global deals saw a 16% increase at $4tn, compare this with the UK’s volume, which was up 40% and driven by really big stuff in tech and pharma, it isn’t exactly looking bleak.

“The north west has a good market as well. When the referendum came around we all got our tin hats on and thought it was going to be awful. There are deals that are difficult to execute at the moment, but across the piste, I’m expecting 2019 to look broadly like 2018 with plenty of overseas interest and plenty of private equity interest.”

How is 2019 shaping up? Jonathan Boyers, UK head of corporate finance at KPMG sees positive things ahead.

“The last 12 months from a seller’s point of view has probably been the best that I can ever remember.

“Phenomenal deals have been happening in multiples. Deal volumes are coming down, as there’s been a scarcity value, but there’s so much private equity money around and with sterling having a low value, there is a lot of attention from overseas investors.

“I hadn’t noticed the impact of Brexit until we came into the last year. A lot of buyers are waiting until after Brexit negotiations have finished, but as Daniel said, we don’t expect it to deter investments whatsoever.

“I would predict that we will probably see that there is more appetite, with a load of deals done post-Brexit. I think prices will hold up for good quality businesses.”

When it comes to innovation and disruption, are any of The Big Four making vast changes? Sid Hussain, transaction services partner at PwC has seen significant changes, having begun his career on a typewriter.

“We’ve moved on considerably in 20 years, but we can now use data and analytics in order to find the best deals for our clients. Teams of 20+ people are no longer trawling through books for information, the output is hugely different.

“We have to be disruptive to make disruptive deals. The way we do things will fundamentally change with AI, which is already being used to look up reports etc.

“AI highlights issues in reports now, this is no longer manual. This is only the beginning in my opinion, and the way we operate and the way we connect the dots and speak with people will get buyers and sellers connected across the world much quicker.”

Panel two discussed the Manchester scene and its successes. Hosted by Claire Frangou, corporate finance director at KPMG the panel welcomed Ryan Bevington – Maven, Neil Poultney – Vodat, Kieran Lawton – Palatine and Vic Stewart – The Alchemist.

This panel discussed the £13m deal that saw Living Ventures sell The Alchemist brand to Palatine Private Equity, but what advice would they give to a potential investor?

Neil Poultney, managing director at Poultney says: “Investments are about people. You’re entering into a business relationship with individuals you’re going to deal with on a regular basis.

“There are going to be bumps along the way and you have got to be confident that the people you’re investing in are going to overcome those bumps with you.”

Ryan Bevington, investment director at Maven Capital Partners agreed with Neil’s earlier point: “Be aware of who you are about to get into bed with so to speak.

“You need to understand how your funder is going to act if you come up to difficult times. It’s not just the investor who needs to be careful, you need to think about your funder and make sure you aren’t just bothered about an extra couple of percent, instead of someone you’re more comfortable working with when times get hard.”

The general consensus among the panel was to ensure any business you’re acquiring or selling to understands your company’s culture and understands how you work.

Keiran Lawton, investment director at Palatine Private Equity said: “The most important thing is the team because we all work in different ways.

“Some firms like to invest and call back in three years to discuss the positives and negatives, but we like a partnership approach. A dictatorial approach isn’t what we’re about, it’s discussing where we are, where we want to be, how we’re getting there and how we will help.”

Vic Stewart, finance director at The Alchemist agreed with Keiran’s sentiment, as someone on the receiving end of an investment. “Think carefully at not just where the business is, but where you want the business to be at the next exit and choose the one that gets you to your destination,” added Vic.

Each year, world-renowned data analysts, Experian put together a corporate finance report outlining our region’s best deals. Click here to download the report.