Finance
Midlands businesses are reporting financial stress
Almost one in five of big businesses the Midlands are financially stressed, according to new research from KPMG. KPMG’s restructuring practice
analysed the filings of all UK businesses with revenues in excess of £10m over a five year period to the end of 2018 – a number which grew from around 22,000 in 2014 to 27,000 in 2018. For each filing, KPMG analysed a
range of metrics including trading performance and profitability, cashflow and liquidity, and debt leverage, which were then combined to produce a score to identify financial stress and distress. The number of businesses in the
Midlands with revenues over £10m has grown faster than any other region outside London, from around 2,700 in 2014 to 3,400 in 2018. The level of financial stress has increased broadly in line, with 19 per cent of businesses stressed in 2018 compared with 18 per cent in 2014. Those in distress also remained
steady, representing approximately three per cent of businesses.
“Companies in the building and construction sector are buckling under significant strain, particularly those at the larger end of the market which historically operate on wafer thin margins. “The downturn in new
construction projects has also affected the industrial manufacturing sector, as construction materials form a large part of the sector’s output. There is also significant distress in the packaging sub-sector due to rapidly changing consumer tastes – particularly with the move away from plastic. “Both construction and
Chris Pole: Big businesses are buckling under the strain
The sectors with the largest
number of stressed businesses, industrial manufacturing and construction, also saw the highest number of administration appointments in the region during 2019.
Chris Pole, restructuring partner at KPMG in the Midlands, said:
manufacturing have also been affected by the well-publicised struggles of the high street, with a growing number of shopfitters and manufacturers of retail fittings among the insolvencies during 2019. “While the retail sector
experienced fewer insolvencies during 2019 than 2018, it still represented 10 per cent of all administrations in the region.”
Sector Focus
Bumper year as PwC advises huge deals
PwC Midlands’ Corporate Finance (CF) team completed 14 deals, made nine new hires and three promotions, and advised on transactions totalling more than £1bn in 2019. Transacting with both
corporate and private equity buyers, the PwC team has worked alongside some of the region’s most interesting private businesses, established PLCs and international corporate clients across a variety of industries. Highlights for PwC included
delivering seven deals in seven weeks, including the Primary Capital backed MBO of Foster + Freeman, Barratt Developments PLC’s acquisition of Oregon Timber Frame, and the sale of the ALE Group to Dutch counterpart Mammoet. Sarah Taylor, corporate
finance partner for PwC in the Midlands said: “We are delighted to have supported a number of clients across a broad range of transactions over the last 12 months.”
March 2020 CHAMBERLINK 75
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