Deals market remains ‘buoyant’ as firms navigate post-pandemic recovery

Two leading voices in the finance sector and deals market reinforced their commitment to support growing businesses in the region.

In a fireside chat at Invest North, Stewart Haworth, director of debt finance at OakNorth Bank and James Dow, founder of Dow Schofield Watts, one of the UK’s most active M&A advisers, looked at the financial support that was made available to companies in a year of lockdowns and how that has changed the funding landscape.

For OakNorth, it’s been business as usual. The challenger bank has lent £1.1b in 2020 supporting growing business through the pandemic while also supporting clients with the Coronavirus Business Interruption Loan Scheme (CBILS) and Coronavirus Large Business Interruption Loan Scheme (CLBILS).

Stewart Haworth

Haworth said: “We’re still here to support business across the region. We focus on profitable growing businesses with a good management team and that strategy hasn’t changed.

“In terms of the pandemic itself, there have been some real success stories of businesses that have adapted and performed and have actually remained resilient.

“From our perspective we want to continue to support those businesses across the north.”

Asked what OakNorth is looking for in a business when forecasting has been challenging amidst the pandemic, Haworth pointed to ‘liquidity.’

“For instance, we are seeing in some sectors where working capital cycles have reduced, it’s generated cash and as we come into recovery and turnover is getting back to pre-Covid levels, then there will be that funding requirement and funding need.

“There have been schemes such as CBILS or the recovery schemes that are helping to support businesses as they come out of the pandemic and that’s what we have been focused on over the last 12 months.”

Last month, OakNorth Bank provided Dow Schofield Watts with a seven-figure debt finance facility to make a strategic investment in Camlee Group, an owner-managed corporate finance boutique.

Commenting on the transaction, Dow said: “We have been growing steadily as a business for 20 years but time is finite and opportunities immense so it was time to make a step change in our activities when we came across OakNorth.

“What I want from a finance partner is a short chain of command and people who do what they say they are going to do and OakNorth delivers on that.”

He added: “We are very optimistic for the future. We’ve had a good year with lots of activities coupled with government support and as we move into the recovery stage, more companies will need advice in restructuring and refinance. There is also an opportunity to attract more professional advisors to work in an ambitious organisation as we are expecting to launch more service lines and new geographies too.”

Highlighting previous events that have impacted the economy such as the financial crisis, Dow spoke of the resilience of businesses to bounce back.

“Ultimately business always proceeds,” he said.

“People have to function so after two or three months of chaos after any big event, a new norm often develops.”

Asked what a post-pandemic recovery looks like, both Haworth and Dow agree that the transactions market remains ‘buoyant,’ but urge businesses to be prepared and understand their cashflows as government support schemes start to unwind.

Howarth said: “As we move from the government support schemes and furlough and to ‘business as usual’ we need to ensure there isn’t that cliff edge or complete drop off and it’s more seamless.”

James Dow

Looking at sector trends, Dow said online and ecommerce alongside industrial property and warehousing has gone through the ‘proverbial roof.’

“We’ve also seen a tremendous boom in medical healthcare which will continue to grow as we’re going to live in a new environment where hygiene is important.

“The casualties are businesses that have been very dependent on people being together. In those areas, we are now seeing many entrepreneurs who are now recognising that now is a good time to invest!

“Property leases are favourable which means for some they can get into locations they probably couldn’t before.”