Deals market on the up but caution remains - Nutton
The number of potential mid-market deals has increased in the East Midlands, though banks are continuing to be cautious and public sector cuts are likely to have an impact. That's according to John Nutton, the head of corporate finance practice for PKF in the region. He told Insider that vendors have become more realistic on price expectations.
He also said that cashflow lending continues to be a problem for most businesses.
He told Insider: "At PKF, our experience of the mid-market is that although the number of potential deals has increased as more vendors become realistic on price expectations, funders, and banks in particular, continue to be cautious.
"Cashflow lends continue to be in short supply for all but the most robust of businesses, leaving room for more asset based lending solutions. Generally, private equity houses are cautious about the future and closely question the ability of businesses to withstand severe public sector cuts."
He added that cuts in the public sector are having an impact on the deals market.
He said: "It is clear that many businesses, whilst not directly involved in the public sector, are often indirectly impacted by this important economic driver.
"Many of the cutbacks, whilst mooted, have still to be fully implemented. I believe the resultant uncertainty will continue to inhibit the prospects of any real recovery in deal activity for much of the year. The uncertainty is magnified by increasing costs of commodities, inflation and the spectre of almost certain rises in interest rates later in the year."
But looking ahead, he added: "It is not all doom and gloom and specialist private equity houses such as Endless and Rutland continue to capitalise on opportunities arising from semi-distressed businesses which are nonetheless fundamentally sound.
"As always, everything is for sale at the right price; the skill to completing deals in this continuing difficult market is being able to determine what the transaction price ought to be, taking account of both the uncertainties and opportunities for growth as the economy gradually recovers."
