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Turn down the heat

By Rachelle Peard. Published on 14 July 2014

As the city streets absorb the July heat, there’s evidence that a cooling breeze in the markets is tempering the potential for midsummer madness.

After some of the busiest months I have ever seen, there is a definite slowing down as some companies such as retailer Fat Face step back from the brink of an initial public offering, while others who went to market earlier this year are seeing shares trading at less than their listing price.

Saga, Pets at Home and Just Eat are among those who have seen their Spring flotations leave investors out of pocket, while shares in the AA fell around 5 percent on its first day of conditional trading last month.

The slowdown has been mirrored across the pond, where demand for IPOs in the US has also cooled as investors become more selective about the stocks they want to buy, and companies are forced to take a closer look at sizing, structuring and pricing.

Here, some commentators are blaming market fatigue and over-valuation, but I prefer to think of it as a timely reminder that too much, too soon isn’t good for the longer term health of the economy.

To steal a cooking analogy, if early 2014 turned up the heat and took the water to boiling point, then what’s happening now is a reduction of heat to a rolling simmer. And while we don’t want things to cool too quickly, we definitely want to avoid hitting boiling point.

The arrival of a more sustainable and manageable growth trajectory is good for all of us and that includes the executive recruitment market because it means companies have the confidence to return to hiring mode.

Whereas in the past few years the focus has been on “one in, one out” – or in the case of the depths of the recession not “in” at all – now businesses are strengthening teams and adding significant headcount once more.

This applies across the spectrum of financial roles – those with a strong commercial finance edge are in great demand as CEOs look for the right team to drive business growth forward. While those with specialist expertise in areas such as tax, treasury and reporting skills are equally sought after.

The longer that interest rates remain low the better it is for companies looking to invest and expand and it’s the perfect time for those who are looking for new opportunities to stake their claim on a new challenge.

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