Looking at the Year ahead: Funding activity in the North West

On MBOs:

“It’s very much been business as usual and despite many economic headwinds, we’ve seen continued action in the MBO space. We expect this trend to continue in the new year with more owners planning succession than normal, especially for smaller deals with companies with EBITDA under £1million.

On Employee Ownership Trusts:

“This year we have noticed more businesses are thinking about EOTs and how to transition their business to employee ownership. It’s likely there has been movement in this space because of the initiative’s tax benefits and because we’re hearing from more businesses like Richer Sounds or Go Ape that have successfully made the switch. Not all lenders provide this type of finance, but from what we’re hearing from advisers, we expect to see more EOTs in 2023.”

On Cash Out:

“It’s unsurprising this year that we have seen businesses looking to de-risk or extract some value from their business without selling out this year in the current climate. In the last month of 2022, we’ve started to see more mid-market PE deals and we expect to see more in the new year.”

On Buy and Build:

“It’s been business as usual this year despite the current economic climate. We are seeing an uptick in insolvencies, but let’s not forget that there are plenty of businesses that are well run and capitalised. We’re seeing a lot more businesses looking to acquire because this is a good strategy to mitigate margin pressure when faced with increasing costs. We’ve also seen more PE-backed Buy and Builds and substantial movement in the technology, telecoms, marketing and PR and IFA sectors which we expect to continue in the new year.”

On Growth and Re-finance:

“For most businesses, the ambition is to grow. The consideration is whether they can do that organically or whether they can borrow against working capital to acquire, refinance or invest. We’ve seen that there is a skills shortage and the likelihood is that some companies will use capital investments to help automate their processes.”

On Tech:

This year we’ve observed that tech businesses have been struggling for talent, particularly in regions where individuals gravitate to London for larger salaries. Unless these businesses find a solution, we expect this to be a substantial barrier for these tech businesses to grow in the new year. It’s definitely a sector where we may see a few more acquisitions.”

On Oil and Gas:

“Oil and gas have been a good space for us this year and we’re expecting there to be more opportunities in 2023. Despite this sector currently being on the up, it’s cyclical and operators who supply are diversifying to defend against this by going into telecoms and renewables such as offshore wind and laying undersea cables.”