Spotlight on Financial Advisory

What have been the key growth areas from an FA perspective this year?

Pre-COVID-19, each of our Financial Advisory businesses had performed strongly, with nine percent growth. Our M&A and restructuring teams were each growing strongly at double digits, which was quite unusual for such countercyclical businesses. However, when COVID-19 hit and things were locked down, our M&A business stalled overnight while organisations tried to understand what was going to happen next. Unsurprisingly, we became very busy working with companies that were stressed or distressed.

Our debt advisory team also saw a significant up-tick – 27 transactions were completed in the first three months of lockdown as clients sought to amend and extend their debt facilities. We had also seen more formal administration activity come through the consumer and retail sectors, as well as organisations seeking our help with their supply chains and how to access Government support. In June, M&A started in earnest to return to the agenda with opportunistic bolt-ons and asset sales serving as a more strategic tool, particularly for those companies whose earnings had been hit.

What has COVID-19 meant for us and our clients?

For Financial Advisory, given the type of work we advise on, it’s put us at the centre of the boardroom agenda. Our clients have had to adapt and implement new strategies at a speed not seen before, particularly in raising capital, so we’ve had to work at pace too. To put it into context, during the last global financial crisis in 2008, businesses didn’t go to zero revenue overnight. Here, it’s happened so quickly and the speed of having to deal with issues like accessing liquidity or Government funding has been unprecedented. In many cases it has meant helping companies through complex restructuring processes while trying to protect as many jobs as possible. Being able to react quickly, whilst delivering the same level of high quality work we’re always striving for, has been critically important and led to a magnitude of change for everyone.

What are the big trends and shifts we’re expecting in the months and year ahead?

Government will play a much bigger part in corporate life, both in terms of them managing the financial support they’ve put into the economy and how clients are handling the facilities they’ve received. Business protection in its widest sense – job preservation in particular – will be significant. Much of the restructuring work right now is to protect the elements of businesses that keep them alive and this will continue. The scale of this challenge is vast, and we do not underestimate the importance of our wider public interest role to help companies, wherever possible, to protect jobs and safeguard their financial stability.

Looking ahead, there’s likely to be a Government focus on growth, so we expect to help clients create new platforms for growth and this will be critical to the strength of the economy. There will also be consolidation in the market, which will bring winners and, sadly, losers. Whether you were financially strong or not prior to COVID-19, it’s now the survival of the fittest to some extent.

Strategic M&A will drive the transformative consolidation needed for cost synergies, balance sheet strength and economies of scale, and we are seeing many of the stronger market players already on the front foot.

Where will the biggest challenges and opportunities for our clients be?

Our clients have learned a lot over the past six months and they want to capture this knowledge as they move forward. The challenge will be seizing the positive learnings about cultural changes or efficiencies then applying them for best use going forward. There will be continued distress for some time and organisations will have to make decisions at pace about key issues like their real estate footprint or future working practices.

Attracting top talent and understanding what they want from an employer will also be important, so we won’t drop back into the old model of working. Today’s workforce has seen the benefits of being able to operate remotely, sometimes more efficiently than before. Identifying how to keep the benefits of what’s been learned and move ahead, while addressing negative culture issues like “presenteeism”, is both a challenge and an opportunity for all businesses.

What are you most worried about?

The impact this is having on our people. I think a lot about our people’s personal wellbeing, their own circumstances and their ability to live and work in this environment – I worry that, for some people, this is not sustainable. I want to create a challenging, attractive and fun environment for our people. These factors are all critical for people’s enjoyment at work and it’s challenging to recreate them over Zoom. Also, we have to find new ways of instilling confidence in our people as it’s critical for a lot of what we do in professional services.

However, it has been really encouraging to see the level of resilience, innovation and leadership that’s been demonstrated at all levels. Initially, from a firm-wide leadership perspective, we had concerns about how we’d get all of our 20,000 people working from home, but we did so successfully without too many difficulties. From a Financial Advisory point of view, we also questioned how we’d win new work and complete our client engagements in this new environment. But our people have shown they’re so adaptable and can still win big pieces of work, so that should give us a lot of confidence for the future.

How have you managed through lockdown?

Lockdown has been manageable and has actually brought forward a lot of positives. Before COVID-19, I normally travelled a lot and was away four days a week. Being home has meant I can spend more time with my teenage family and, unusually, sitting at the same table for dinner has become a major event! I’ve also enjoyed a lot of walks in the Peak District with the family and our cockapoo, Margot. I’ve spent many of my early mornings in the garden – while not much of a gardener, I have enjoyed keeping the garden tidy by jet washing anything in sight!