Corporate finance: what we might expect in 2021
David Petrie, ICAEW's Head of Corporate Finance, reviews an unprecedented year and looks ahead to what we might expect in 2021.
It has of course been an incredibly tough year for many people across the world. COVID-19 has had an extraordinary impact on mortality, public health, education and employment. The pandemic has also had an enormous impact on businesses. Some will not recover, others have prospered.
For corporate finance advisers and investors, getting some M&A transactions over the line has been very tricky. Over the past nine months I’ve had many online ‘meetings’ with many faculty members and heard about the impressive efforts and ingenuity they have needed in order to complete deals. The pandemic and the measures to save lives are clearly far from over – although, as I write this in late November, the news about potential vaccines has been a lot better.
Corporate advisers’ efforts will be focused for many of their clients on raising new investment in order to support recovery and future growth – and to trade beyond the crisis. Assessing forecasts and projections, and ensuring business plans are robust and resilient with all risks addressed, will prove critical. Then, as always, there will be the opportunity to look at the role that successful M&A can play as part of those plans.
Another area of focus has been protecting the livelihoods and welfare of their own employees working in corporate finance, investment and business. At the faculty, many of our operating activities took place online. In September, we held our board meeting via video conference – a first. Almost all of our technical and public policy work with government departments and regulators also moved online.
Over the summer, the faculty launched three new themes: Global Investment and M&A; Innovation and Sustainable Recovery; and Future Advisory Professionals. I have devised the themes with my faculty colleagues Shaun Beaney and Katerina Joannou to be the focus of our work over the next two years, including Corporate Financier magazine. We will continue to provide new technical guidance for faculty members, and for ICAEW more broadly. Our work will be at both policy and practical level, and will continue to look at the measures needed to assist businesses through this crisis.
Earlier this year, I met Alok Sharma, the UK’s Secretary of State for Business, Energy and Industrial Strategy, officials from HM Treasury, the Bank of England and the British Business Bank, to discuss the government’s emergency funding for companies. More recently, I was part of a call with ministers Nadhim Zahawi and Lord Grimstone about the National Security and Investment Bill, and gave oral evidence to the parliamentary committee on that legislation in November.
The faculty always ensures that members’ interests are represented when it comes to commenting on and influencing regulation that will affect corporate financiers. At the end of 2020, the UK’s Brexit transition period draws to a finish. The rules about the provision of financial services and corporate finance work will be an important part of future trading relationships. As always, our aim is to ensure that regulatory change supports sustainable corporate finance activity. When the faculty responds to formal consultations, the devil is often in the detail – and in spotting potential unintended consequences of new or revised regulations. A number of important measures are anticipated in 2021.
The faculty will continue to react and respond to these changes, drawing on the considerable expertise within its many member firms and its Technical Committee, chaired by Deloitte partner Yvette Allen. The faculty’s programme of publications and events – online and face-to-face – for 2021 includes the fourth edition of Private Equity Demystified, written by John Gilligan and the late Professor Mike Wright, as well as best-practice guidelines on public-to-private deals (to be published with PwC and Travers Smith) and environmental, social and governance in M&A (to be published with WSP).
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Finally, I’d like to pass on my very best wishes to the faculty’s members and their families for the festive season and new year.