Unlocking Growth in the East Midlands: Key Takeaways from the ThinCats Roundtable

At ThinCats, we’re committed to understanding the regional dynamics that drive SME growth across the UK. That’s why we recently hosted a roundtable discussion in Nottingham, bringing together a group of financial advisers and private equity investors to discuss market trends, challenges, and opportunities in the East Midlands.

Here’s what we learned:

A Region Rich in Entrepreneurial Spirit

The East Midlands continues to stand out as a thriving hub for owner-managed businesses. Statistically, the region outpaces the West Midlands in entrepreneurial activity, with resilient and adaptive companies spread across cities like Nottingham, Leicester, and Derby.

Traditional industries such as manufacturing, logistics, agri-business, infrastructure, and aerospace remain strong. Many of these businesses have been trading for decades, making the East Midlands a heartland for mid-market SMEs with deep roots and high potential for growth.

A Shifting Deal Landscape

Over the past 18–24 months, the region has seen a surge in trade acquisitions, with strategic buyers becoming more targeted and aggressive in their pursuit of quality assets. The rise of compounders and increased interest from Nordic investors have created new dynamics in the M&A market, particularly for companies with sticky customer bases and consistent revenue growth.

However, the deal environment is not without its challenges. Due diligence has become more rigorous, and even small deviations in trading numbers can delay transactions significantly.

Financing: Alternative Lenders Gaining Ground

The discussion highlighted the growing role of non-bank lenders in filling the gap left by traditional banks. While there is still a significant reliance on high street banks—75% of mid-market SMEs remain backed by clearers—these institutions are increasingly constrained by cost-to-serve pressures and a lack of appetite for the mid-market.

In contrast, alternative lenders like ThinCats are offering greater flexibility, faster turnaround times, and more tailored terms, making them an attractive option for businesses looking to scale quickly or navigate complex transactions.

Private Equity Needs a Clearer Narrative

A key theme of the discussion was the need for better education around private equity. Many SME owners remain unfamiliar with what PE can offer and how it works. Misconceptions around loss of control and short-termism persist, despite the reality that most PE investors are focused on long-term growth and alignment with management teams.

Participants agreed there is a joint responsibility among advisers, lenders, and private equity firms to demystify the process and highlight real-world success stories—especially those where PE has provided the support and capital to unlock transformational growth.

EOTs: An Attractive, but Complex, Exit Route

Employee Ownership Trusts (EOTs) are increasingly seen as a viable succession route—but not without complications. While they offer compelling tax benefits, EOTs are sometimes used as a fallback when traditional sale valuations don’t materialise. The panel raised concerns about deferred consideration, added debt, and scalability post-transaction, suggesting EOTs need to be carefully considered in light of long-term business strategy, not just as a tax solution.

What We’re Seeing at ThinCats

Ravi Anand, Managing Director at ThinCats, spoke about the robust performance of our lending book and how we’re using data and benchmarking tools to help SMEs track performance against peers. This has led to a notable increase in follow-on funding, particularly at the lower end of the mid-market, enabling businesses to continue growing through uncertain times.

Looking ahead, while macroeconomic and political headwinds remain—whether from UK policy inertia or US election uncertainty—latent deal activity is still present, and we’re cautiously optimistic about a more active second half of the year.

In Summary, the East Midlands is a region full of potential and resilience. With the right mix of capital, expertise, and education, its businesses are well-positioned to thrive in the evolving economic landscape. At ThinCats, we’re proud to support this journey—providing flexible funding and strategic insight to help SMEs achieve their growth ambitions.