A year of turbulence
Since we launched Evolve Corporate Finance 12 months ago, the deal market has seen its fair share of turbulence, but opportunities prevail. To mark our 1st year anniversary, our partners and founders, David Neate and Justin Sparks, look at some of the key highlights over the past 12 months, how the deal market has performed, and share their views on what the remainder of 2023 looks like and what 2024 may bring.
A prolonged return to growth
Our first 12 months at Evolve have been set against the backdrop of a turbulent economy. Firstly, we saw a brief flirtation with “Trussonomics” which destabilised the financial markets in the UK, and then with geo-political concerns to the fore, the global economy stepped straight into a battle against inflation with interest rates rising around the world.
Whilst technically we are not in recession, all the indicators suggest that we will be in a prolonged fight to return to economic growth. Unlike previous downturns, where the economic slowdown resulted from a specific issue and affected a relatively small section of the economy, this time around the impact is being felt more widely. Higher energy costs have fed through the supply chain and persistent inflation is now the main concern. As a result, interest rates are set to remain at current levels for some time.
Against these prevailing headwinds the M&A market has undoubtedly slowed, with deal volumes down when compared to 2022. Some would say this may not have been an ideal backdrop in which to launch a new corporate finance boutique, but we remain extremely optimistic for the future.
A good year for Evolve Corporate Finance
Notwithstanding the difficult external environment, we are delighted with the start we’ve made at Evolve Corporate Finance. We have grown the team from a standing start to six team members and look forward to welcoming new colleagues shortly – more on that to come soon.
On the transaction front
- We have completed our first equity investment, supporting Opus Safety, leading a subsequent fundraise for the business, and acquisition of two complementary health and safety businesses.
- In July, we also completed the multi-million-pound sale of a majority stake in Amco, a UK and global logistics firm, to Johannesburg Stock Exchange listed, South African-based, global logistics and mobility specialist, Super Group.
Whilst deal volumes in the market are down, we are heading into our second year with a strong pipeline of opportunities, across a range of sectors and transaction types.
Reasons to be optimistic
There are always winners and losers in every slowdown and this time round will be no different. We are likely to see the valuation aspirations of sellers and buyers converge as the economic challenges continue. International appetite for investing in UK business will remain, and there is a wall of private equity and institutional money to be invested. Interest rates may be at their highest levels for ~15 years, but there remains strong appetite from lenders to support growing businesses.
There undoubtedly will be consolidation across several sectors as UK corporates seek to grow market share and drive out synergies.
In the owner-managed market, there is undoubtedly a pent-up appetite to sell. With a general election at some point in the next 15 months, the continued uncertainty surrounding the prospect of further changes to Capital Gains Tax rules is likely to weigh heavy on the minds of entrepreneurs, encouraging owner-managers to consider bringing their businesses to market.
The macro-environment does feel challenging right now, but we see momentum continue to build as we head into 2024 and beyond. With the quality of resources and opportunities we have at Evolve, we are very confident about the next 12 months.
ViewPoint: get the latest news, views, insight, and updates from our team
This article is part of our new series of newsletters which brings together the latest news, views, insights, and updates from the team here at Evolve Corporate Finance. To subscribe to receive our ViewPoint series, simply email a member of the team at news@evolvecf.co.uk.
