Corporate finance experts at national audit, tax, advisory and risk firm Crowe are predicting a year of consolidation across a number of markets, and have seen a growing number of cross-border deals being completed.
Andy Kay, Corporate Finance Partner in Crowe’s Midlands & South West offices, said: “Many businesses are facing the double whammy of having to repay COVID-19 borrowing and seeing energy costs surging at the same time.
“This, for many, is putting their finances under strain and will provide opportunities for cash-rich and low-geared companies to make strategic acquisitions throughout 2023.”
The Coronavirus Business Interruption Loan Scheme (CBILS), introduced by the government to support businesses to trade through the COVID-19 pandemic, saw £46.6 billion drawn down by 31 July 2022, and to that date only £4.7 billion had been fully repaid by borrowers, according to figures published by the Department for Business, Energy & Industrial Strategy.
Kay added: “While many businesses will know what they have to repay under the CBILS and Bounce Back Loan Scheme (BBLS) obligations, what they are struggling to budget for is likely energy costs when fixed deals, such as three year terms, come to an end.
On 9 January, the government announced the new “Energy Bills Discount Scheme” for UK businesses, charities and the public sector from 1 April 2023 to 31 March 2024
“However, notwithstanding this double burden of known CBILS costs and uncertain energy costs, plus potential inflation-related wage settlements, to come this year, many businesses have an underlying viability if you strip out the exceptional costs.
“Many, though, may not be able to ride out the immediate storm and so prudent directors may be considering selling or merging the profitable parts of their business as an option among others.
“This will provide opportunities for those looking to accelerate their expansion plans, and will favour those with a significant war chest available to take advantage of opportunities quickly as they arise.”
Corporate Finance Director Chasz Coulsting said the message to ambitious business owners would be “don’t be afraid of acquisitions in an uncertain economic climate”.
Coulsting said: “If you have an underlying strategic reason for the acquisition and can work up a viable 90 day turnaround plan that you believe would be instrumental in restructuring the business, it could provide a blueprint to accelerate your growth plans.”
Crowe’s Corporate Finance Team in the Midlands & South West had a busy 2022, with deals including the acquisition of a chain of 16 pharmacies owned by The Hub Pharmacy Ltd by Allcures plc.
They also advised on three deals in the year for Customs Support Group (CSG), the leading digital customs broker in Europe.
CSG acquired Britannia Bureau Ltd which is based in Langdon, Essex, and has offices in Liverpool and London. The deal followed Customs Support’s acquisitions of two other UK businesses in May – Osborn Customs Services, the Rochester-based customs clearance experts, and the Dover export agents KSI Portlink, which were also advised by Crowe.
Netherlands-based CSG first expanded its operations into the UK with the acquisition of UK Customs Solutions back in October 2021.
Most recently, Crowe supported Kreiss SIA, a Latvian-headquartered European transport and logistics group, which acquired C Neil Dowson Ltd, a haulage and distribution business based in Immingham Docks, Lincolnshire.
Furthermore, Crowe has supported the Midlands & South West banking community, most recently Shawbrook with its investment in RS Building Products (Venesta), a commercial washroom manufacturer and supplier, and Virgin Money on its investment to support the MBO of Wells Plastics, the largest independent specialist additive masterbatch manufacturer within the UK.
For an informal, confidential discussion on potential acquisitions or disposals, contact Andy Kay on 0121 543 1900 or email andy.kay@crowe.co.uk
