Where next in Private Equity? Pt 2 with Andrew Webber (TLT)
Continuing on our series of articles where our Private Equity connections and Professional Advisors give us their sense of the immediate impact of Covid-19 on future deal flow, considering different market sectors, potential access to finance, and what lasting affects Covid-19 could have on future trends and markets.
Our contributors are Paul Wood, Director Corporate Finance advisory at Grant Thornton, Andrew Webber, Partner and Head of Corporate at TLT, Ned Dorbin Head of South West and Investor at BGF and Richard Taylor, Regional Director South West and South Wales Corporate and Commercial Banking at Santander.
In this second article, Andrew Webber Partner and Head of Corporate at national commercial law firm TLT responds to the question:
Do you think that there could be any underlying messages in this ever-changing World and what are the key lessons coming out of this current Pandemic?
We’ve seen an acceleration of certain trends which now provide an opportunity for those businesses that address those trends to accelerate their growth plans
‘Now that we’ve had more time to assess the scale and impact of the pandemic on the economy, the business world and the wellbeing of those we know and across the country, there are some key themes emerging – some unique to what’s evolving and others that are being reinforced.
Ultimately the impact of the pandemic and the lock-down restrictions do not change the quality of a management team and its business overnight but the trading conditions have been seismically altered and the businesses that can adapt and evolve quickly and sustainably will continue to prosper. Those that are demonstrating an ability to deal with fluctuations in demand for their products and services are proving how robust their systems, plans and people can be, including in many cases not only their business continuity plans but also their growth potential for those dealing with sudden surges in demand. Amongst the impact and the restrictions imposed on us, we’ve seen an acceleration of certain trends which now provide an opportunity for those businesses that address those trends to accelerate their growth plans too – examples being seen in the sub-sectors of e-commerce and fulfilment, VoIP, MedTech, home entertainment and digital security. Managing the business through this period and even growing and improving its operations and compliance culture is an opportunity to go beyond the typical business plan in a way we haven’t previously seen.
More of our communication may now be online but the need for networking and relationship building remains vital, especially for start-up and early-stage fast-growth businesses yet to raise external funding. There was an unavoidable delay in overall deal activity but there remains a considerable amount of liquidity and capital available and investors will be looking to establish and build relationships with those that are well positioned now that plans are underway for the lockdown restrictions to ease and the deployment of that capital to accelerate. Networking events and intermediaries, including professional advisers who have well established sector knowledge, can always provide an important role in connecting businesses and investors, as well as sharing market developments. Those developments include how typical investment transactions and terms have evolved to address the rapid pace at which trading conditions have changed and we’ve seen that in the deals on which we’ve advised recently.
‘There are plenty of investment and growth opportunities’
New opportunities are also being presented for businesses with ambitious growth plans. The unique cause of the current economic climate makes it more likely that we will see quite quickly the businesses that remain well positioned and funded to grow compared to those that are not. The rebooting of the economy will create new targets for bolt-on acquisitions and buy-and-build programmes to be carried out at speed. Identifying these opportunities at an early stage and mobilising investment capital and well-resourced advisers will be key.
In the deals on which our team have been advising we have been seeing developments in investment structures to adapt to revised funding models and also the varied trading conditions and prospects across sectors being reflected in valuations which then translate into deal terms to be balanced between sellers, managers and investors.
There are plenty of investment and growth opportunities for those that have adapted to the new World we quickly found ourselves in, but our priority is a safe return to the new ways of working together.’
This week, we have great contributors from the World of Banking, Accounting, Investing and the Legal sector, who will take us through their thoughts for the post Covid-19 World and beyond.
Look out for our next article featuring Ned Dorbin Head of South West and Investor at BGF.