Yorkshire and North East Dealmakers Guide 2016 - 35
Q&A
35
How can funds be raised
in the current environment
post-Brexit?
The question of raising capital is a key consideration for most private businesses
as they evolve. Capital can be required to support growth, de-risk shareholder's
private wealth or re-align equity to incentivise management and enable
succession planning.
corporate finance
director
PwC
Email: charlotte.tracy@
uk.pwc.com
Institutions will evaluate opportunities on a deal by deal basis and we expect
this to lead to an increase in competition for quality investment and lending
opportunities with strong growth prospects, Brexit resistant operating models and
proven management teams.
In the current environment minority equity transactions are an attractive option
for shareholders seeking to partially de-risk, cash out and secure investment
whilst retaining control. Although shareholders are sometimes reluctant to dilute
their ownership the absolute value of the retained share may be worth more as a
result of the equity investment and additional knowledge, skills and management
oversight brought by a private equity investor.
The lower cost of capital of debt finance, less intrusive nature of lenders and
the range of different ways to borrow money from traditional commercial banks
and alternative funders such as uni-tranche and mezzanine providers makes
debt finance an attractive option for private businesses. In some situations the
requirement for capital and interest repayments and restrictions on cash extraction
can make this option less appropriate.
Robust preparation and planning has always been a key stage of raising any
form of capital and this is even more important in the current market. Thorough
preparation and a clear articulation of the funding requirement and growth
opportunity optimises investor appetite, available terms and deliverability.
Q&A
Charlotte Tracy
Following the news of the UK's decision to leave the EU and the subsequent
volatility in the financial markets which followed there could be a slow down or delay
in activity as parties assess the impact of Brexit. However, the drivers of demand
for finance remain and investors and lenders will need to continue to deploy
capital throughout this period of uncertainty and the forthcoming negotiations
to exit the EU - evidenced by the fact that we have already seen a number of
regional examples of successful deal completions following the Brexit result.
Table of Contents for the Digital Edition of Yorkshire and North East Dealmakers Guide 2016