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Tim Sadka

Partner - Kent & Sussex

26th May 2020

How will UK Private Equity and Family Offices direct investment as we recover from the Covid-19 Pandemic?

In this final post of a three part series, Tim Sadka, Partner in Rix & Kay’s Corporate Team, looks at where investment might come from as businesses seek recovery strategies post Covid-19.

Recent UK Government support for smaller businesses and some mid-market scale companies is welcome and will hopefully lead to medium term support remaining in place for several years. But that support by itself will not help the UK business community to survive and thrive, in many instances more capital investment to support the growth plans for a business will be needed.

Of course, for some businesses, access to capital will come from existing shareholders and investors. For many the need to access capital will mean going outside the current shareholder group with private equity and family offices well represented in the UK to take up opportunities as they arise.

As the Covid-19 Pandemic struck, the first priority for private equity and family offices has been to look at and support current investments. As there have been some anecdotal reports that a large number of companies have failed to successfully apply for CBILS or CLBILS loans, the need for investors to support existing investee companies by way of loans and further equity investment has arisen.

With the lockdown easing, and a return to a new normal, private equity and family offices will be looking for new opportunities. Warren Buffett of Berkshire Hathaway, once said ‘Opportunities come infrequently. When it rains gold, put out the bucket, not the thimble.’ While the value of companies listed on the publicly quoted markets may already have adjusted, the private company landscape is less clear. Our focus at Rix & Kay Solicitors is on owner managed SMEs’ and lower mid-market companies where price and value is, more often than not, less clear.

For businesses looking to raise capital, expect private equity and family offices approach to valuation to be robust, nothing new there. Equally, like any investor, they will want to invest and to deliver returns. Transactions will be completed where each party gets comfortable with valuation and there is a level of trust. We are used to working with businesses and other professional to prepare for the process that will precede completion of any transaction involving change of ownership, whether to UK investors or those from overseas. We are also well placed to introduce other advisors where the need arises.

With colleagues in the team, we have extensive experience of supporting clients on the merger and acquisition journey including navigating the uncertainties of past recessions and the collapse of the financial sector – all vivid memories. If you read this and would like to discuss the commercial and legal challenges and opportunities you are addressing, to get an insight and support from someone not caught up in your circumstances, please do contact me, or by phone to +44 (0)800 276 1151 or any member of Rix & Kay’s Corporate Team

Read more insight from Tim Sadka as he reflects on how agile businesses are adapting to realise opportunities as Covid-19 lockdown unfolds and a look back at past economic struggles and how today’s government might tackle the debt crisis created by Covid-19.

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