Top 50 – Corporate Finance – Out of the doldrums?

Three years of low activity in flotations, mergers and acquisitions, and lengthening realisation periods for private equity could well be at an end if the results of this year’s Top 50 survey are anything to go by.

In 2003, firms reported minus growth figures almost across the board, while this year changes are – with very few exceptions – positive.

For the Big Four alone, corporate finance is worth almost £750m in revenues, with all members of this elite club reporting improvements on last year. Nonetheless, the numbers have to be read carefully and should not be taken as evidence of a guaranteed change in fortunes.

For instance, both PricewaterhouseCoopers and Deloitte combine insolvency with corporate finance, so this indicator should not be interpreted as decisive.E&Y’s income has risen a healthy 17% to £203m.

Last year, Deloitte reported £199m for insolvency/corporate finance. This year, the figure is £219m, a rise, the firm says, of 10.9%, while PwC also reports an increased income of £253m, a figure it states is up 2%.

But it’s also worth noting improvements among smaller firms. Baker Tilly declared a 29% rise to £15.2m, while listed accountancy firm Vantis noted a 33% rise to £4m. Numerica claimed a staggering 600% rise to £2.1m.

Given an absence of megadeals, which had made the market so fretful at the top end, financiers have clearly found they can continue to make money off much smaller value projects. On the flotation front, the main markets have been unpopular, but AIM has continued to be a favoured place to raise capital while incurring low compliance costs.

At the top end, plenty of money has come from private equity, which has been a real growth area where the recently popular secondary buyout (investors selling to investors) has kept the market lively.

On another front, the much-vaunted arrival of personal finance as a major new service line raking in huge revenues does not seem to have materialised. Figures should be interpreted with a degree of caution again, as many firms wrap it up with tax and wealth management as a service.

Many, however, appear to have piloted well clear of the area. This may be for a number of reasons, not least the sheer weight of regulation from the FSA that goes hand in hand with offering personal finance advice.

That said, some people clearly see it as a lucrative area of their business.

Numerica, again, is a fine example; despite a welter of bad news at the business, its personal finance revenues have still grown 16% to £3.6m.

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