JDC Corporate Finance is very pleased to announce its latest deal, the trade sale of Saxon Packaging.
JDC Corporate Finance is very pleased to announce its latest deal, the trade sale of Project Platform.
JDC Corporate Finance is very pleased to announce its latest piece of work involving the capital restructure of Rossi Long Consulting.
JDC Corporate Finance is very pleased to announce its latest work, a structured MBO of Lemon Groundwork Solutions.
What’s happened so far:
Weak sterling helping East Anglian hospitality sector
We are now a month on from the most historic political event in a generation.
There’s been a huge media frenzy surrounding Brexit and we’ve been gathering feedback and views from our clients following the vote. So in this update we share what real businesses in the real economy have been experiencing over the last 30 days and also how we think East Anglia will be impacted moving forward.
In the days immediately after the vote, there was huge volatility in the stock markets but this had little or no impact on the regular East Anglian business.
History shows us that the performance of the real economy, whether UK wide or locally, does not closely follow short term movements in the FTSE.
Whilst investment bankers and hedge funds were making or losing millions, all the local businesses that we’ve spoken to have stayed focussed on delivery and supporting their customers, whatever sector they may be in.
Weak Sterling – the winners and losers
Of greatest immediate impact locally has been the weakening of Sterling. This was predicted by many, in the event that Brexit occurred and we expect this weakness to continue for some time. Most of our clients had hedged against dramatic movements and were well prepared for the short term shock but the longer term impacts could be substantial.
A weak Sterling compared to the Dollar/Euro means importers are suffering from higher prices and we know some businesses are starting to consider passing on price rises to their customers. For consumers, one of the first signs of weakening Sterling has been fuel prices rising at the pumps due to oil being priced in Dollars, albeit the impact so far has been marginal.
On the flip side, exporters will benefit from their goods and services being more competitive abroad and some of our clients in the local leisure industry are already seeing increases in bookings. ‘Staycation’ and the demand for UK based holidays over the next two months has grown, having already been buoyed earlier in the year with terrorism fears reducing some overseas travel.
Similarly, UK holidays will be relatively cheaper for overseas visitors so we can expect bookings in Cambridge, Norwich and our coastal areas to increase through the rest of this year and next.
Oil & Gas – continued bumpy recovery
Brent crude hit an eleven year low of $28bbl in January 2016 and has slowly and steadily increased to over $45bbl at the time of publication.
This gradual recovery was already leading to signs of a potential recovery in order intake for local businesses further down the oil & gas supply chain. We see no change to this gradual recovery in the short term.
Our clients in the energy sector that have international operations tell us they are used to operating in hostile or difficult environments where political uncertainty and upheaval are the norm. The current situation may be dramatic in UK terms but is not unusual in many international markets and the business owners we have spoken to are very resilient and see it as business as usual, albeit in a tough market.
In the longer term, there is the uncertainty of a possible second Scottish Referendum which could create complications for those linked to businesses in Aberdeen. This may lead to a reluctance to invest as a result of the uncertainty but it will be a long time before there is any clarity on this.
The weakness of Sterling will help those local energy businesses with overseas headquarters as their UK operations will become relatively cheaper. However, any Capex projects for UK owned businesses may have just become more expensive, as they are often priced in dollars.
Funding for the East – possible increase
We expect the Government to continue and possibly extend its Enterprise Finance Guarantee (“EFG”) scheme. This is designed to support Bank lending and increase liquidity for small businesses.
Whilst the take-up for EFG loans has been patchy, in recent months we have achieved real successes for our clients who were otherwise struggling to raise finance for growth. The scheme currently applies to loans of up to £1.2m with the Government guaranteeing 75% of the debt. This encourages banks to lend where there is limited or no security.
In addition, the Bank of England has already committed to do “whatever it takes” to support the economy. The exact form of any support is still to be determined, with interest rates so far remaining on hold, but we do expect Funding For Lending to be continued / enhanced and this is also designed to increase bank lending.
Doing deals – no pricing pressure yet
So far we have seen no reduction in deal flow.
All of our transactions in progress before the vote are continuing, and enquiries and opportunities have continued as normal.
In the global M&A market, uncertainty and/or a short term recession is a concern. This could lead to a significant fall in larger transactions with multi-national focus.
We expect many of our “sell-side” clients to be unaffected by the Brexit decision. When dealing with owner managed businesses, we often find that the wider global or economic conditions are not the principal factor in the decision making process. Succession planning, retirement and a desire to sell for personal reasons can all take precedence over the wider economy.
The only immediate impact we expect is that Buyers may try and use the uncertainty as an excuse to reduce prices. But if the business fundamentals are unchanged there should be no reason for a reduction and that’s where the job of a strong lead adviser comes in, to maintain value and deliver the best deal.
Some overseas investors may see Brexit “pressures” as a real opportunity to acquire a business whilst Sterling is weak and if corporation tax is decreased, which outgoing chancellor George Osborne hinted at, then inward investment could be further stimulated.
Economic forecasts are either wrong or lucky…
So let’s be honest, nobody really knows what the longer term impact of Brexit will be on East Anglian businesses.
For now, the UK is still a member of the EU and still has access to the single market, and nobody knows how long or on what terms any exit deal will be agreed. Certainly there’s a huge political mess and a lot of negotiations to be finalised beforehand.
In the short and medium term, business continues as usual.
In our opinion, this is not a repeat of 2008, which was a financial crisis. Our clients remain focussed on getting the job done, working hard and delivering great products and services to their customers…and building their own success stories.
JDC Corporate Finance is very pleased to announce its latest piece of work involving business growth for Mountfield Group PLC.
JDC Corporate Finance is very pleased to announce its latest deal, the trade sale of J&S Products.
Specialist corporate finance firm JDC have secured a minority investment from Maven Capital Partners in GEV Group (www.gevgroup.com).
In assisting GEV Group to secure its recent equity investment, Dave Howes, a director at JDC acted as lead adviser supported by executive Ryan Symonds, running a competitive process liaising with a number of strategically selected private equity houses and venture capital trusts before Maven was identified as the preferred partner.
The funding enabled two founding shareholders to exit the business, whilst providing CEO David Fletcher and his dynamic executive management team with additional development capital to support GEV’s impressive growth plans.
Dave Howes, Director at JDC Corporate Finance commented:
“I am thrilled to have advised the shareholders and management team on this deal, which represents an exciting step for the business. In Maven, GEV Group has secured a partner with an excellent pedigree to assist the team in meeting its objectives. I look forward to continuing to assist the team, Maven and the business on their exciting growth plans."
David Fletcher, CEO of GEV Group commented:
"We engaged JDC due to their successful track record in our sector and the immediate confidence we felt in their ability to secure a deal with the right structure for all parties within our Shareholder Group.
Dave Howes and his team guided us through every step of the transaction, providing advice and importantly acting as an effective filter during the due diligence process, allowing us to continue running our business in parallel.
Their commitment to the transaction, negotiating the best deal and securing the right partner in Maven was always evident and went beyond what we would have expected from our corporate finance advisers.
We made a good decision to appoint JDC and I would have no hesitation in recommending them to any business owner considering a transaction."
JDC are proud to have been awarded two prestigious 2015 Acquisition International M&A Awards; Corporate Financier of the Year and Accelerated M&A Specialists of the Year. The Acquisition International’s M&A Awards celebrate the outstanding efforts and amazing achievements of all those involved in identifying, coordinating and seeing through to completion substantial business deals. Acquisition International’s M&A Awards have rapidly become one of the most important and highly respected programmes of the year, commending those most deserving for exceptional service over the last 12 months. Congratulations to the team at JDC, and we look forward to another exciting year ahead.