Chris Harrington of Reed Finance shares insight on the rise of the M&A and IPO specialist under the current political and economic climate.
In 2016, the UK saw the highest level of domestic mergers and acquisitions activity since 2008. According to the Office for National Statistics (ONS), deals with a combined value of £23.9bn were completed last year in the UK. This clearly highlights a business opportunity for accountancy firms who wish to offer advisory and deal completion services and potentially get involved in what could be business-changing contracts. And it’s not just UK-centric activity that is experiencing significant growth. Again, according to the ONS, the value of merger and acquisition activity in the UK during 2016 undertaken by foreign companies reached a record high of £187.4bn – reinforcing the belief that the UK remains a highly attractive location in which to do business.
The upsurge in UK deal levels is explained by a combination of factors. Many organisations are expressing increased business confidence, while the growth of SMEs is another important driver. This is generating a real momentum as leaders and owners seek out business growth, not by organic means, but via expansion strategies that focus on joining with or taking over rivals.
In this climate, organisations must seek to adopt a strategic recruitment policy that focusses on attracting and retaining in-demand talent with specific skillsets and deal-making experience to bolster their advisory M&A and IPO functions. This will allow accountancy firms to offer a compelling case to potential clients keen to get a deal done, safe in the knowledge they have the expertise and understanding to help them succeed.
And then there’s the Brexit factor.
While the long-term implications of the nation’s decision to exit the European Union last June are still to reveal themselves, and as Article 50 triggers two years of intense and protracted negotiations to settle on a deal that suits both sides, Brexit also presents a time of change and, with it, business opportunities for many.
Uncertainty is in the air, but thinking that the Brexit influence will result in less deal-making activity is, in the eyes of many experts, wrong. Against a background where bold decision-making will often be rewarded in the long-term, we can guarantee that many entrepreneurial business leaders are eagerly eyeing the marketplace, ready to swoop as value-driven opportunities present themselves while others dither.
Being ready to support this exciting and fluid commercial environment should be at the top of any accountancy firm’s agenda. The question they have to ask themselves is, do they employ the requisite experience and talent to be part of the M&A conversation?
This is where implementing a strategic recruitment policy now will reap business benefit in the future.
As deal levels increase, the demand for accountancy professionals who can ably demonstrate they have the experience and advisory skills to add value to the process will only intensify. By the nature of the work involved, such talent is not widespread and competition will be fierce at times of heavy M&A and IPO activity when it comes to attracting and retaining individuals who really can make a difference.
Gaining appropriate mergers and acquisitions experience relies on actually undertaking the deals. Considering the number of deals that do take place, the quantity of qualified personnel will be disproportionately small – only intensifying the demand for what is a niche skillset and underpinning the employee’s powerful position to secure highly favourable employment terms.
Future proofing the advisory function
In order to capitalise on the predicted and continued high level of deal opportunity, accountancy firms need to strengthen their merger and acquisitions functions in order to compete for M&A business that rivals will certainly be chasing, or risk losing out in the long run.
Advisory functions ready and capable of supporting M&A deals that may be further complicated by the impact and unpredictable nature of Brexit will be in a far stronger position to answer the contract call when it comes knocking. Simply doing nothing to build a compelling service case will mean that, for many accountancy firms, they will be going backwards.
And of course, there is another reason to keep expanding. The competition for these contracts is only growing as law firms expand their advisory offering on M&A and IPOs. This means they will also have specialists in these fields on their radar. As this trend continues to gather pace, having law firms building their own finance advisory arm will be a significant development for accountancy firms and their employees.
Accountants with experience and proven success in vital fields such as tax, compliance and legal services are the candidates who have sound basis upon which to form part of a strong advisory function that can be offered to potential deal-seeking clients. Recruiting such in-demand individuals must be a central element of a progressive recruitment policy in order to secure M&A-related business going forward, despite the intense competition that all accountancy firms will encounter when seeking out talented professionals to be the face of their mergers and acquisitions market offer.
Attracting such talent means firms need to actively market themselves and proactively seek opportunities to ensure they are visible to candidates with these skills. Networking and brand building are key elements of this ongoing exercise.
M&A professionals who know they are going to be in demand will make job choices based upon many factors, and accountancy firms need to ensure they offer a clear and stimulating career progression path that rewards success and achievement and values talent that can make a business difference. Working hard to stand out from the crowd is part of the recruitment strategy that firms have to adopt or risk being overtaken by more ambitious and motivated rivals desperate to get a piece of the multi-billion pound UK mergers and acquisitions action.
In the present circumstances of growing appetite for doing deals and a changing Brexit backdrop that will create business opportunities, accountancy firms must prepare to help clients to plan for what can often be an uncertain future. With competition for M&A and IPO specialists at a high and the skillset only being developed through experience, not education, the accountancy firms that focus on their own futures and seek to attract proven individuals with the skillsets demanded by the mergers and acquisitions market will be able to take advantage of this lucrative niche and thrive.
Chris Harrington is senior finance recruiter at Reed Finance.
As KPMG celebrates its annual inclusion week, Anna Purchas, head of learning at KPMG in the UK, discusses why investing in talent is a priority for the firm
Mergers and acquisitions deal activity reached its highest level in eight years in the final quarter of 2016, according to a BDO report
Jon Addison, LinkedIn UK’s head of Talent Solutions, explores how businesses can plan ahead to ‘Brexit-proof’ their talent pipelines
BDO has announced plans to attract top talent in its 2017 intake