Trends and predictions for 2024
Making predictions is a fool’s errand, but the reservoir of resilience amongst leaders of the region’s businesses means optimism is in the air, despite everything that’s been chucked at businesses over the last few years.
New research from Lloyds Bank has found that over a third (36%) of North West businesses are making New Year’s resolutions to improve their productivity, a clear sign growth is on the agenda for the year ahead.
Building teams to support new opportunities is also on the minds of firms with more than two fifths (42%) expecting to hire more staff in the New Year.
While a survey from Cheshire and Warrington LEP showed 50% of those questioned are either very or somewhat confident about their prospects for the next 12 months
Trend for 2024
Nearly every North West company that we have written about through last year ended 2023 in a worse place than they started.
London as a destination capital market may be running its course. The only consolation for boards was that it was equally grim for pretty much every quoted company. Yet something will have to give. Dechra was the most significant business to signal an intention to leave the market and assume new ownership from private equity investors, with the intriguing mixture of old European money and sovereign wealth investment.
Even businesses on the cusp of record profits – like JD Sports and Pets at Home – trade at a ridiculous discount.
THG may be performing better, but a lot will depend on corporate take up of its ecommerce engine Ingenuity.
Mike Ashley likes the devilment of taking strategic stakes in AO World and Boohoo.com, and this will continue into 2024, but it seems a stretch to make a more aggressive move.
Elsewhere, the biggest purchasers of stocks on the London stock market were companies themselves, therefore it stands to reason that the trend of share buybacks will continue and lead to more companies opting for a private future.
It’s not appropriate to speculate about which companies could join Real Food and Unbound in the ignominy of administration and suspension, but there will be casualties.
Predictions: Half a dozen take privates. Ones to watch: THG, Pets at Home, Carrs.
Trend for 2024
Given the depressed state of the corporate finance market in 2023, this year has to be better, right?
Private equity buyers have to demonstrate to investors – limited partnerships, pensions funds and private family offices – that their money will work harder. Saying it’s a tough market doesn’t produce the required returns so deals have to come from somewhere. But with more money flowing into buyout funds, the competition is stiffer.
Estimates put the total amount of this unused capital at a staggering $3.7tn, and as advisor Claire Trachet said, it’s this capital which will help fund the revival of the global M&A market.
As BVCA chair and Endless founder Garry Wilson said in a new year message, the shift in emphasis towards building value has demonstrated a subtly different shift in operating mindset across private equity, “ a clear dedication to supporting portfolio companies, even if it means diverting attention from pursuing new deals” he called it.
Rainmakers, as we refer to them, will continue to talk up the spectre of a Labour government as an added incentive to get deals away. But the biggest driver will be getting money out of the door, and recycled.
Stabilised interest rates may also have steadied the nerves of boardroom strategists looking to make buyside decisions, making borrowing more predictable. That at least introduces another level of competition to private equity buyers.
Predictions: Uptick in private equity deals by summer.
Trend for 2024
The longest running sporting business story in the region has been the farcical auction process to sell a stake in Manchester United.
Now that Sir Jim Ratcliffe has emerged as the supposed victor, his INEOS team now have the onerous task of turning around the Old Trafford supertanker.
The other big football question is over the 115 charges faced by Manchester City. As someone quipped recently, “Manchester City have more lawyers than Addleshaw Goddard” and the process will stretch on way beyond this year.
Everton meanwhile face problems of a different kind. Their ownership issue shows no sign of being any clearer. Further investigations into the suitability of investment group 777 may be an unwelcome distraction for the points deducted by the first team who are looking to still be in the Premier League when the new stadium opens in 2025.
In Rugby League, the move to the IMG grading will bring some good news for Salford Red Devils, if they can secure the deal to remain at the AJ Bell stadium, but will see Widnes Vikings missing the cut.
Predictions: This time next year, Manchester City to swerve penalties, Everton to still be seeking a credible buyer.
Trend for 2024
There are elections everywhere this year, locally, the Greater Manchester and Liverpool City Region Mayoral elections in May, and the US presidential in November are the known knowns, while the date of the UK General Election is in the gift of Prime Minister Rishi Sunak.
That there are elections in Russia at all might be a surprise, though the identity of the next President won’t be.
There are also going to be elections in Taiwan, India and Ukraine, which could have profound knock on implications, and the return of European Parliament elections (remember them?). Though no longer the concern of UK voters it will nonetheless be a barometer of European opinion after Brexit and whether the European ideal holds firm.
After populist right wing gains in Italy and the Netherlands, there was a return to the view that the volatility of the electorate was back on the cards.
Yet for the UK every single opinion poll for the last two years has a centrist social democrat Sir Keir Starmer ahead of whatever version of Conservative Rishi Sunak is cosplaying that week.
The choice of early March for a new Budget, and talk of interest rates coming down in the summer, seems to represent a digging in of the Conservatives, either to pull off a 1992 style electoral miracle, or prevent a 1997 style wipeout, or worse. That seems to suggest an October election despite Labour efforts to talk up a May poll.
Prediction: An October General Election in the UK will return a majority Labour government, slam dunk wins for Burnham and Rotheram (and Paul Dennett in Salford). In the US it won’t be a Trump v Biden re-run and if either is on the ballot, they won’t win.