CONSULTATIONS

PISCES update

The Corporate Finance Faculty has responded to the FCA’s consultation on the regulatory framework for Private Intermittent Securities and Capital Exchange System (PISCES) sandbox arrangements on behalf of faculty members. PISCES will be a new trading platform that will enable intermittent trading of private company shares using existing market infrastructure.

ICAEW agreed with a requirement to disclose core information and standardising what PISCES companies disclose to investors.

Our recommendations aimed at improving the quality of such information, including that:

• The PISCES Sourcebook should go further in defining the minimum information that ‘financial statements’ must contain and which may be different to the accounts a company files with Companies House; and what constitutes a significant acquisition or disposal.
• Forecasts are likely to be of higher quality if prepared according to a preparation framework, and more useful for investors.
• The market risk warning should state that an independent party may not have been involved in preparing and determining the company’s price parameters.

The full response can be read here.

Tax on carried interest

The Corporate Finance Faculty has contributed to ICAEW’s response to the government consultation on the tax treatment of carried interest. The response was led by the ICAEW Tax Faculty. The key points were:

• There is no need for a minimum co-investment requirement for tax purposes. This is because, for most funds, investors already require the fund managers to co-invest.
• For the minimum holding period option, the income-based carried interest rules already tax carried interest as income where the fund’s average holding period of its investments is less than 40 months. A minimum holding period for individual fund managers would add a further layer of complexity and would have an impact on their job mobility.
• Grandfathering provisions are required for existing carried interest entitlements because the level of co-investment and carried interest entitlements are governed by the partnership deed agreed at a fund’s inception and cannot be changed.

The full representation can be read here.

FUTURE EVENTS

Power and politics

The Corporate Finance Faculty is hosting another Career Success event on 13 March 2025 from 18:00-20:00 in the One Moorgate Place Club at Chartered Accountants’ Hall, London. 

The Career Success – Navigating Power and Politics event will feature a keynote speech by John R Hughes (above), director of Radical Strategy, a consulting practice that often deals with issues of power and politics. He co-founded Farnham Mediation, a network of lawyers and psychologists working to resolve disputes, and previously worked at PwC as a subject matter expert on power and politics. 

Hughes will cover how to think about power in a deals context, and practical ways to increase influence; how to maintain integrity and welcome challenge; and how to communicate with political skill in the ‘noisy’ world of M&A.

The event is free to members and places can be booked here.

Faculty AGM

The Corporate Finance Faculty’s annual general meeting will be held at Chartered Accountants’ Hall on Thursday 22 May 2025. 

The AGM will include a review of the faculty’s work on behalf of its members and ICAEW over the past year. ICAEW’s head of corporate finance, David Petrie (above), will also outline the faculty’s plans for 2025 and 2026. Always a popular event in the faculty’s calendar, the AGM also provides an opportunity for members to network and meet the faculty board, its technical committee and staff. A buffet lunch and networking in the Members’ Room will begin at 12:15, followed by the AGM at approximately 13:00. Members can book a free place here.

M&A ON THE HORIZON

Prospecting for deals

The Corporate Finance Faculty held its first event of 2025 in January – the Prospecting for Deals in 2025 webinar. ICAEW head of corporate finance David Petrie chaired the panel discussion in the second half of the online event.

Russell Enright, senior director and VP sales EMEA at Intralinks, set out the M&A themes for 2024 and 2025.

Enright’s expectations for the coming year included:

• more big ‘transformative’ deals, particularly in the tech and financial services sectors;
• AI will continue to be a driver of M&A in the TMT sector, and in others; 
• increased competition for deals, particularly from private equity; and
• Middle East and Japan are the most bullish regions, UK and China the least.

A panel discussion on the outlook for the next 12 months then followed. The panel comprised:

• Fenton Burgin, debt and capital advisory partner, Evelyn;
• Jo Davenport, transaction services partner, BDO;
• Chris Price, partner, Mobeus Equity Partners;
• Mohammed Senouci, corporate partner, Travers Smith; and
• Rick Thompson, managing director, Singer Capital Markets.

On the subject of interest rates and capital markets, Burgin said: “Market volatility is definitely going to remain a factor through 2025. The Bank of England’s ability to pull rates down will be impacted by macro factors. Then there are the micro UK-specific factors, specifically the impact of the taxation changes that we saw in October, which is now firmly feeding through to business confidence and growth.”

BDO’s Davenport said valuations in labour-intensive sectors such as the consumer sector are being tempered because of the increased cost of UK employment coming in the spring – increased employers’ NI costs and minimum wage – but she remained optimistic: “We have a couple of deals in the sector and hopefully a few successes might build some interest.” Planning for April when the increases come into effect is a big exercise and they need to work out operational efficiencies. Professional services will also be affected. That sector has had a lot of interest from PE in recent months. While they will have to focus on cost efficiencies to offset those increased costs, there will still be interest in it.

At the lower mid-market end of the private equity market, Price said he could see opportunities continuing in specialist consultancy because the UK still leads the world in regulatory thinking. He added: “Anything to do with AI and technology is very hot. We’ve entered a market – which is where ESG was a few years ago – where you must have a strategy for AI. If you want a credible M&A process, you need to move from talking about AI as a concept to having a plan. You need to be using technology to enhance your business across the board.”

Thompson said the past two years had been about M&A rather than IPOs. He said he expected more public market M&A. He also stated: “After a very flat period of activity around oil and gas and the related support services, this will be an increased area of activity off the back of the change of regime in the States.”

On infrastructure investment, Senouci pointed out: “One drag on infrastructure investment has been where rates are at the moment and in particular the yield that you can get investing in renewable projects, when you compare that with what you can get in gilts. It has meant investors haven’t got the appetite to invest in projects they would have invested in three or four years ago.” But he added that infrastructure investment to support data centres will drive investment.

The full recording of the one-hour webinar can be viewed here.

Looking ahead

David Petrie, ICAEW head of corporate finance, attended the Bayes M&A Research Centre’s annual ‘look ahead’ for 2025 last month. Petrie represents ICAEW on the M&A Research Centre’s advisory board. Geopolitics featured heavily in a panel discussion with senior industry figures. While most agreed there would be a more favourable regulatory environment in the US with President Trump entering the White House, several felt his return will see geopolitical factors shaping much M&A activity this year, meaning fewer cross-border deals and a focus on supply chains. 

Panel members included: 

• Ian Hart, chairman, UK investment banking, UBS, and former director general of the Takeover Panel; 
• Cyril Auger, senior managing director, Ardian; 
• Liz Claydon, partner and global head of deal advisory, KPMG; 
• Matthew Wells, SS&C Intralinks; and 
• John West, Mergermarket Group.

Several panel members forecast a resurgence in private equity activity after several big funds returned large sums of cash to investors last year. And they predicted a continued rise of continuation funds as a source of liquidity to private equity investors.

Energy transition to power data centres and infrastructure, and a potential reshaping of the automotive industry, in the context of trade wars, will likely drive M&A activity.

“There was an appreciation that we are no longer in the earliest stages of AI,” said Petrie. “The panel agreed that market players are likely to use AI to improve efficiency and gain competitive advantage. There were also concerns around AI security and confidential data in M&A deals. That underlines the role of rigorous controls and the work the faculty has done on cyber security.”