26 corporate finance


Getting through Groundhog Day


In recent years the UK and European economies have been stuck in a Groundhog Day-like rut, but from year to year rather than day to day. There has been a lack of consistent business confidence and economic growth, as the deep-seated problems of indebtedness, lack of efficiency and structural atrophy affecting a number of parts of the continent sap the ability of business to deal with the problems sown in the boom years, writes Andrew Peddie, partner, head of corporate, Pitmans LLP


Periods of greater optimism have been followed by setbacks and concerns about whether the austerity medicine will actually kill the patient rather than the underlying disease. The timeline for sustained recovery seems to lengthen with every year that goes by.


For businesses, and those of us in the deal-doing community, it feels like each financial year starts from a remarkably similar point to the last


For businesses, and those of us in the deal-doing community, it feels like each financial year starts from a remarkably similar point to the last. Cue Sonny & Cher, for those of you who know the film.


This is so even if, truth be told, from the perspective of the Thames Valley, the deals environment could be a lot worse. There is a sense of a continued slight upward incline in activity. There are established players, both corporate and institutional, in the market and active in undertaking and funding transactions. There is a strong advisory community helping to make the transactions happen. There are willing sellers continuing to reach the point where an exit is right. What lessons can be drawn from recent years’ experience in this context, both for the deal community and businesses or individuals on the cusp of involvement in a significant corporate transaction, if we are to continue to build the region’s transaction activity?


The importance of businesses, owners and their advisers working together effectively in the deal context is paramount. For those used to working on repeat transactions with the same team, this becomes a positive habit in providing the right outcomes. The deal process should identify problems, and how to resolve them, or when to call a halt if resolution seems to be impossible (if the risks or actual costs of an issue overwhelm the commercial logic for the deal). The more experienced the advisers and principals are in dealing with similar issues, and also in working with each other, the more efficient this is.


For those new to the M&A process, it is important to hire the right advisers, and to understand how to use them effectively. Many of us will have had experience of the opposite from time to time, which can reaffirm the importance of getting it right. Whether in planning how to structure a transaction to deal with identified tax risks, or providing full disclosure of risks and liabilities, professional advisers have got to be allowed to do their job if they are to deliver any value. The client who does not let them do so is at risk of wasting more value than he thinks he is saving.


How do you work out who the right advisers are for www.businessmag.co.uk THE BUSINESS MAGAZINE – THAMES VALLEY – JUNE 2013


you? There is no “one size fits all” of course. Deal size and circumstances are important. Personality is an essential component. There are undoubtedly individuals who are suited to particular types of transaction and client. Perhaps the key point is that you want to be working with a team with wide and deep experience, and who are comfortable in their positioning on transaction work and their approach to key issues, so that you will get consistency of advice.


The ability to drive a deal forward, to persuade, cajole or demand progress from the many parties who may be involved, is at bottom what you want on your side – in fact on all sides of a transaction. Perhaps you want above all people who know themselves and their capabilities profoundly well.


At Pitmans our addition within the past year of further proven private equity and venture capital deal-doing experience has added an important string to our bow. There are plenty of reasons to be confident about the future, and about our ability to help more clients do successful deals, and therefore to contribute to further growth in the corporate finance activity in the region. But for all involved, working out the right way to break the current cycle of a flat economy will require some profound thinking about where to focus energies, and how best to achieve that growth, in the context of the skills and resources available to them personally and corporately.


Details: Andrew Peddie 0118-9570321 apeddie@pitmans.com www.pitmans.com


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