Talking Tax & Treasury: Our expert quarterly analysis

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In the first of a new series, Lynley Hall, Tax and Treasury Partner within the CFO & Finance Practice at Eton Bridge Partners, gives her insight into the current state of the sector.

Looking back over Q1, there is overwhelming evidence that it has been an incredibly positive and encouraging start to 2021 from a Tax and Treasury perspective.

Despite the significant ongoing challenges posed by the coronavirus crisis, the clients I speak to are looking to the future with great confidence. They have adapted in response to the pandemic, secured funding where necessary for the short or long term and adjusted their position accordingly.

So many businesses have displayed resilience, initiative and agility in recent months. They have shored up their balance sheets, worked with their banking partners where they needed to and are now looking to move ahead with dynamism and positivity.

Key factors underlying the buoyancy in the UK landscape

Throughout Q1, we saw a strong and consistent demand for Tax and Treasury professionals, both on an interim and permanent basis. That has been the case across the FTSE 250 and the private equity space.

There are several key factors for this. The first has been the positivity generated by the successful roll-out and take-up of the Covid-19 vaccination in the UK.

Second, the fact that Brexit went ahead gave a measure of certainty and stability to the market place around conditions going forward.

A third factor related to the previous two is that there has been a release of pent-up demand from PE funds. Specifically, we have seen strong demand from PE funds seeking to drop people into their portfolio companies in greenfield Tax and Treasury roles. That is a clear indicator of pent-up demand being met as large organisations and individuals press ahead.

Even though business conditions are still impacted by Government guidelines over the implementation – and relaxation – of Covid-19 restrictions, many companies are looking for a Head of Tax or Head of Treasury on an interim basis for six months to help with pre-deal work.

Meanwhile, they are also running a parallel search for permanent post-acquisition hires to ensure their processes and procedures are compliant and their global tax footprint is appropriate.

Even sectors hardest hit by Covid-19 are ready to bounce back

It has been encouraging to witness the sheer resilience of so many businesses in these challenging times. That includes companies in sectors such as aviation and retail, which were particularly heavily hit by the restrictions imposed in response to the pandemic.

Firms in those sectors have reduced cost bases but have looked to put long-term funding in place and maintained strong relationships with their banks.

Other sectors have boomed in the last 12 months. Pharmaceuticals, and indeed any businesses related to pharma, plus areas such as green energy, have been in good shape.

Almost every single client I have spoken to has found a way to survive through this situation. They have either accessed more funding, looked at paying down debt in the longer term or leveraged their relationships with their banking partners to keep the wheels turning.

International prospects are equally positive

Of course, Eton Bridge Partners has a significant international footprint as well as its UK business. We have carried out 120 placements across 30 territories in recent months.

Interestingly, demand is still strong across the European region, which is somewhat surprising given that the vaccine roll-out has not been as extensive as in the UK. But we are seeing PE funds keen to close out deals and move forward with transactions.

This is also the case in the United States, where the certainty engendered by the vaccine roll-out and the result of the presidential election have had a positive stabilising impact.

There are some nations where the process of recovery from Covid-19 still has some time to run. However, past performance is a good indicator. There are areas of Asia that were hard hit initially but are recovering strongly, so we should expect the same to apply for emerging markets such as India.

On course for a strong V-shaped recovery

When it comes to the prospects for the UK economy as a whole, all the indicators are looking positive. The FTSE is very strong, and there appears to be plenty of business and consumer confidence out there.

Let us all hope that we are heading towards a strong V-shaped recovery, buoyed by FTSE 250 and other listed organisations and the international footprint of firms based in the UK.

One change in the workplace of the near future is that there is certain to be a far keener focus on health and wellbeing. We have lived through a time of great stress, which has thrown a spotlight on the importance of good mental health and the way that relates to personal and professional resilience and the ability to cope with situational change.

For all of us, the coming months will bring the challenge of working through the recovery and coming out stronger, calmer and more resilient on the other side.