UPDATES

FDD guideline launch

The Corporate Finance Faculty launched its latest guideline last month, on financial due diligence. Co-written by PwC and the faculty, with a review carried out by the technical committee, it was launched at Chartered Accountants’ Hall. PwC’s global deals leader Lucy Stapleton gave the introductory speech. There was then a discussion on financial due diligence in the age of AI with an expert panel including Ropes & Gray private equity partner Helen Croke; LDC investment director Karen Mann; PwC deals generative AI leader Toby Popplewell and transaction services partner Mark Binney; and AstraZeneca head of deal finance Adam Wyon.

A copy of the guideline can be found here.

New tech committee member

Philip Martin of Grant Thornton has joined ICAEW Corporate Finance Faculty’s technical committee. He is an advisory quality and risk management director with Grant Thornton in London and has been with the firm 23 years, having joined from John Lewis & Co chartered accountants, where he trained as an ACA. He has worked in advisory quality and risk management for 20 years at Grant Thornton.

You can read all about the faculty’s technical committee and its chair, Chris Jarvill, here.

2025 outlook for M&A

ICAEW’s head of corporate finance David Petrie spoke at the City & Financial M&A Summit last month, on the outlook for M&A. “One interesting topic that came up on the panel discussion I took part in (above) was the use of stapled debt and stapled warranty and indemnity insurance, which is increasingly being used to mitigate the risk of deals falling over near the end of a process,” said Petrie. “I would say the consensus was positive regarding the outlook for M&A.”

The day-long summit also included a keynote speech from James Arculus, deputy director general of the Takeover Panel, which provided an update on the application of the Takeover Code to public M&A; and another speech from Joel Bamford, executive director, mergers, at the Competition and Markets Authority.

Midlands alternative finance webinar

ICAEW in the Midlands hosted a webinar in September on the theme of Alternative Finance – What are the Debt and Equity Finance Options in the Midlands? Chaired by Leicester-based management coach Angela Turton, the webinar started with an introduction to corporate finance given by David Petrie, head of corporate finance at ICAEW.

Lewis Stringer, senior manager for East and South-East Midlands at British Business Bank, gave a presentation on what the bank can offer in terms of equity funding for Midlands businesses – the regional angels programme, enterprise capital funds and British Patient Capital, which invests in venture early stage businesses. The bank has six regional funds currently investing, including the Midlands Engine Investment Fund II. 

A recording of the webinar can be found here.

DATES FOR THE DIARY

2024 Annual Reception

The Corporate Finance Faculty’s Annual Reception will be held on Wednesday 13 November 2024, at Fishmongers’ Hall in the City of London. The guest speaker this year will be Lord Clement-Jones CBE, former DLA Piper managing partner, Liberal Democrat peer and co-founder and co-chair of the All-Party Parliamentary Group on Artificial Intelligence. He will give an insightful speech on how AI will impact corporate finance.

The Corporate Development Award will also be presented, as well as prizes for Corporate Finance Diploma students. There will be a champagne reception and plenty of opportunities for networking. 

We will be publishing a full report on the event and profiling award winners in the December/January issue of Corporate Financier.

CONSULTATIONS

AI consultation

ICAEW has responded to the Communications and Digital Lords Select Committee inquiry into scaling up in AI and creative tech. The response, which the Corporate Finance Faculty contributed to, was co-ordinated by the ICAEW tech policy team.

The response highlighted the high level of investment required to develop and train AI models, and how historically that has typically come from global tech giants. Where that will come from in the future is not clear.

For young AI companies – particularly those involved in developing large language models or using them in their products – the challenge is that they need to protect their intellectual property (IP) through patents and/or copyrights. However, developing businesses may struggle to identify exactly what to protect as IP. It is often more difficult to work out what distinguishes a company’s goods or services from those of its competitors, and what can therefore be trademarked as IP. It can also often depend on third parties and licensing arrangements, which may not transfer if the IP is sold. These factors all affect the potential for investment.

The other challenges for such UK companies is the competition for VC funding. This is particularly acute for regional businesses as around two thirds of the UK’s accelerators are found in London, according to independent research by Beauhurst and Sage.

Public offers consultation

The Corporate Finance Faculty has commented on behalf of ICAEW to the Financial Conduct Authority’s (FCA’s) Consultation on the new Public Offers and Admissions to Trading Regulations regime.

The response broadly agreed with the changes. The faculty highlighted that ICAEW had long called for guidance for companies with a complex financial history and welcomed the proposal that such guidance would be in a technical note that, if necessary, can be revised more efficiently.

ICAEW also responded to the proposal to raise the threshold from 20% of existing share capital to 75%, for triggering the requirement to publish a prospectus for further issuances of securities already admitted to trading on a regulated market. ICAEW stated that “for most situations, although not all, the change from 20% to 75% is too steep”. 

It continued: “Issuances of 75% and above will not typically be in the ordinary course of business and there are limited grounds in the consultation paper to support the proposed threshold. Moreover, the proposed threshold is significantly higher than equivalents in other international markets.”

The faculty asked for an explanation from the FCA as to why the concept of relevance had not been included in the proposed criteria for financial information that can be considered to be protected in forward-looking statements: “We question its omission given that financial information that is relevant includes information that could influence the decision of a user of the information.”