Using Our Greatest Asset...
Jackie Hendley chairs business and professional services organisation Birmingham Forward and is a tax partner at KPMG. Here, Jackie and three experts from Birmingham Forward’s membership give an overview of the corporate finance market in Birmingham over the last twelve months and the challenges the region faces over the next year ...
There’s no doubt that the marketplace for corporate finance has been hit harder in the West Midlands than some of the other regions in the UK. The previous hotbeds of deal activity – automotive and manufacturing – gave way in 2009 which, combined with a lack of liquidity in the market, meant the lowest recorded transaction rates of recent years. However, while it’s not time to pop the champagne corks and announce the end of the recession, this year has shown increased activity.
The first half of 2010 has seen a sense of confidence and stability return to trading. Businesses that took corrective measures early - cutting costs and restructuring - have come through the initial recession period better than many thought possible. In terms of activity, the first six months of the year have seen a greater influx of private equity and an increase in transaction levels.
To move forward, there is a need to create an environment that is conducive to entrepreneurial activity. To help achieve this and to stimulate growth there needs to be more tax incentives and a greater flow of finance into the private sector, particularly for small businesses –SMEs have helped stimulate economic recovery and can help to drive us out of recession.
When it comes to our greatest asset, the answer is simple – our people. One consistent thread in the regional economy is that when things get tough, Birmingham businesses excel at working together. It’s this attitude that got Birmingham through the last recession and will surely influence the speed of recovery.
Three Birmingham Forward members now offer alternative perspectives of the market in the West Midlands, and what needs to be done to ensure a prosperous future. Darren Walker, chair of Birmingham Future and associate in the corporate team for Cobbetts: “the past two years has been a rocky time for businesses looking for finance. Encouragingly, we are beginning to see initial signs of recovery – corporate finance teams are getting busier and as a result are starting to expand. Throughout the difficult times, those who were able to keep their corporate teams intact are now better-positioned for growth as things pick up.
“I think the one unanimous sentiment is that Birmingham's professional community has shown a willingness to work together, share information and, in turn, generate more work for the city. While this will stand us in good stead going forward, we need to find innovative ways of making deals happen that will drive economic recovery. In the medium term, I believe the boom markets will come from the pool of entrepreneurial talent we have in the region – in this way, the business community in Birmingham is blessed.”
Sue Lewis, senior office partner for Eversheds LLP: “the Midlands has a first rate corporate finance offering. It delivers advice to a wide range of businesses, at all levels i.e. whether early stage investments or full-list IPOs. In particular, we specialise in helping businesses access capital locally, in the City and internationally. We need to acknowledge that our strengths – a real focus on originating deals and working together to make them happen – make our financial community very attractive to investors outside the region.
“Your geographic location is no longer a work-winning factor – it’s now all down to the quality of your sector experience, your individuals and their relationships. The Midlands has these qualities in spades and we should focus on competing on a larger stage than just the local market. As an example, our team recently advised a technology company, owned by a West Coast private equity house, on the sale of a UK business to a German buyer that was ultimately owned in Japan - the only Midland connection was the relationship of the advisers.
“By reaching outside our region to bring back new sources of capital, ideas and relationships, we’re growing our community and, in doing so, adding value to the local businesses that need our support.”
Charlie Robinson, investment manager for ISIS Equity Partners: “after a regrettably forgettable 2009, the Birmingham corporate finance community will look back on the first half of 2010 with a good degree of satisfaction and a healthy dose of relief.
“So what has changed the market’s fortunes? Increased availability of funds (be it private equity, bank debt or the corporate balance sheet) and a more stable trading landscape have been two major contributors. For me, the key driver has been the recognition that a collaborative and constructive approach to working, greatly improves the chances of completing a deal.
“This may sound obvious, but what I have witnessed so far this year is a real appetite and commitment from all advisors to work with founders, vendors, management teams and funders for as long as it takes to deliver the right deal – that’s a move in the right direction. As a region we are not short of high quality entrepreneurial companies and I remain hopeful that the positive momentum generated so far will continue for the rest of 2010 and beyond.”
Photo: Jackie Hendley, Chairman of Birmingham Forward.
