Economic recovery: What will the ‘new normal’ look like?

About 6 weeks ago we passed the anniversary of the announcement of the first lockdown across the UK.  Something which, at the time, was expected by many to be a short term ‘circuit breaker’ before normal economic service was resumed.  It didn’t pan out like that. 

The talk now is not about getting back to normal but just what, exactly, the ‘new normal’ will look like.

On the one hand it holds out the promise of more flexible working arrangements for those whose roles are not location dependent and each new forecast of UK GDP growth for next 12 months or so seems to show an improvement on the preceding one.  The most recent forecast I have seen as at the date of this blog was the EY Item Club suggesting it might hit 6.8% in 2021.

But if those are the credits, if you will, in relation to the current position of the UK economy there are also some concerning debits we also need to bear in mind. Let’s look at that GDP growth.  C. 7% per annum growth is unprecedented in recent UK history –  but it is only so strong because the extent to which the economy contracted in 2020 as a result of the Coronavirus impact was so great. 

It is estimated that the UK economy shrank by c. 9.8% in 2020 (the worst contraction across the G7).  So even if we do enjoy c. 7% growth in 2021 the UK economy still has a way to go to get back to its pre pandemic levels.  I know what you are thinking,  there are a lot of strong compelling arguments that we have allowed GDP statistics to enjoy a greater importance in the national consciousness than they deserve   I wouldn’t disagree; but that is a separate discussion for another day. GDP measures are important if only for the impact they have on levels of confidence in the economy and our view, as consumers and investors, of its direction of travel.

Then there is the High Street ; or more specifically those businesses which have seen their customers behaviour shift to online spending.  The UK had, prior to the pandemic, one of the highest levels of online consumer spending in the world.  Has the last 14 months or so seen a permanent further shift in this direction?  Time will perhaps tell; but time has already run out for certain long established High Street brands –  Debenhams and TopShop to name but two.  If what we have been through over the last 14 months will be seen to have given rise to a permanent ‘pivot’ across aspects of UK society and its associated economic behaviours it is likely that this will be like the curate’s egg as the saying goes – good in parts.

But let’s not be too much like Cassandra of ancient Greece.  As with any change in the nature or development of a political-economy (Adam Smith used this term as opposed to ‘the economy’ and if it is good enough for him then it is good enough…)  it is usually much easier to spot what will be become lost, jettisoned, abandoned or irrelevant as a result of the changes than what will emerge, germinate and bear fruit. 

I was particularly struck by this over the weekend when, in my local town with an increasing sense of gloom I counted the ‘To Let’ signs on empty boarded up units on the main shopping street. But then, on the way back to the parked car, went down a cobbled side street which was full of smaller independent shops, cafes, bars and restaurants and it felt like a different world.  It was a place of colour, activity, energy and economic activity.

And in many ways that is a good analogy for the wider economy: yes when it changes some businesses fall away but then others can spring up to sometimes (but not always) begin to fill the voids. 

The challenge, I think, will be how best to nurture this creative urge or ‘will to life’ (to paraphrase Nietzsche a little) in the economy and provide the support that these new businesses need in order to survive and put down a root system to enable them to thrive. 

The economic policy response to the sudden shocks of the pandemic in the shape of soft loans (CBILS and BounceBack) and employee support (Furlough schemes) has been enormously helpful for businesses and, even more importantly, employees and thus the wider economy.  These were emergency responses to a unique set of circumstances and so we know that they will not continue forever.  But, helpfully, it appears that the Treasury realises that rapidly snatching back these crutches would do more harm than good.

Yes the UK national debt has increased to what would have been regarded as undreamed of (or un-nightmared of  for some) levels over the last 14 months; but let’s remember three things: 1) we have a FIAT currency system which means that, up to a point, there is a magic money tree and Government can and has ‘simply printed money’ with no adverse impact thus far; 2) related to this is that the bond markets have not been demanding ever higher interest on Government debt so confidence in the UK’s economic prospects is still present and 3) in the aftermath of the 2008-11 financial crash there was a very interesting research paper put out by the IMF regarding the then unheard of levels of national debt in most developed and developing economies.  The paper’s focus was upon what were the most appropriate policy stances for governments to take to most effectively reduce their national debts.  And its conclusion was clear – for advanced economies the best policy to adopt to reduce the national debt was….to ignore it.  Advanced economies should instead focus upon encouraging useful and value creating economic activity across the public and the private realm and inflation plus tax income would, steadily, deal with any excess levels of national debt.

Or, to put it another way, it seems like the IMF conclusion concurred with the advice which, at the time,  was emblazoned across mugs, t-shirts and tea towels across the UK – Keep Calm and Carry On. 

Perhaps that is again(?) the most helpful way of thinking about the UK political economy as it gets back to its ‘new normal’ in 2021.

Author: Stephen Gregson, Corporate Finance Director, MHA Moore and Smalley

MHA Moore and Smalley’s Corporate Finance team wins Deal of the Year (sub £10m) at the North West Insider Dealmaker Awards 2020

MHA Moore and Smalley’s Corporate Finance team wins Deal of the Year (sub £10m) at the North West Insider Dealmaker Awards 2020!

The award was for our work in the investment from BGF in A Wilderness Way, a provider of specialist residential childcare and crisis intervention services. Our corporate finance and tax teams advised the shareholders of A Wilderness Way on the deal which secured backing from BGF to support its continued investment in providing critical care to vulnerable children.

The judges said the investment provided a nice exit for shareholders and was an interesting deal.

Andrew Feeke, Head of Corporate Finance at MHA Moore and Smalley, said:

“It is wonderful to be recognised for the work our Corporate Finance team has achieved. Having worked with A Wilderness Way for many years, we knew BGF would be a great fit for them. We are very proud of the work we do and are delighted to be recognised amongst our distinguished peers in the industry.”

MBO for Lancashire security and electrical firm

A Lancashire-based provider of security and electrical installations has been acquired by its management team in a deal supported by the corporate finance team at MHA Moore and Smalley.

Security and Electrical Installations Ltd, which trades as SEI, has been bought from majority shareholders and founders Paul Mercer and Alan Ogden.

Directors Bradley Ogden, Ian Hearle, Callon Ogden and Sharon Clarke have acquired the business for an undisclosed sum and will take over the day-to-day running of the Leyland-based firm.

SEI specialises in the installation and testing of security, data cabling and electrical systems for a wide range of industrial and commercial clients including the NHS, HM Prison Service, education providers and local authorities. The company is also well-known for its work on high security sites in the energy, utilities and defence sectors.

The corporate finance and tax teams at MHA Moore and Smalley advised Paul and Alan on the sale of the business, providing deal structuring, valuation and tax advice.

Paul Mercer commented:

“Our success over the last 20 years has been down to our ability to build lasting relationships with our clients who have come to value our dependability, drive and integrity.

“Alan and I are proud to have passed the business on to an outstanding management team who embody these same values. They are the right team to take the business forward and will ensure seamless continuity for our valued clients.”

Bradley Ogden said:

“My fellow directors and I are privileged to have been entrusted to take the business on the next stage of its journey. Our whole team is committed to providing our clients with the same high levels of service and quality for which SEI is known.”

MHA Moore and Smalley’s deal team was led by corporate finance director Stephen Gregson, tax partner Tony Medcalf, tax director Michelle Taylor, and corporate services director Judith Dugdale.

David Filmer of Forbes Solicitors advised Paul Mercer and Alan Ogden on the sale. Nicola Whittle at Brabners provided legal advice to the management team.

Stephen Gregson, corporate finance director at MHA Moore and Smalley, said:

“It’s been a pleasure to assist Paul and Alan in this transaction, enabling them to take a step back from the business and realise the rewards of two decades of hard work building a successful business. SEI can look to a bright future with an experienced and capable management team at the helm.”

Founded in 2002, SEI has 23 staff and works with clients nationwide. In addition to security and electrical systems, its other services include LED lighting design and replacement, fibre optic installations, fire detection systems and the installation of electric vehicle charging points.

L-R Callon Ogden, Alan Ogden, Stephen Gregson, Sharon Clarke, Ian Hearle, Paul Mercer and Bradley Ogden.

Is 2021 the year of opportunity?

Let us be under no illusion, the last 12 months have been extraordinary.

We have seen the implementation of multiple lockdowns, the uncertainty of entire sectors prevalent for months on end and only now are we seeing a roadmap back to normality in the UK. However, as experience tells us, nothing is certain, and macro-factors can at any time significantly change the landscape once more.

The impact hasn’t just been on company profits, but also, and possibly more importantly, on personal circumstances, families and the overall wellbeing of not just the UK, but the entire world. Everything seems to have been challenged during this period, and many questions asked of ourselves whether it be our business life, goals and aspirations or our social interaction with the wider environment we exist in.

Many people we have spoken to believe that their mindset has changed permanently, and who would blame them?

One thing though is for sure, those businesses that have been able to navigate successfully through this period of uncertainty are now finding that 2021 may well be the land of opportunity. However, defining ‘opportunity’ is the key differential.

We have seen various themes of thought from discussions with business owners:

  • Keep calm and carry on – with the support of various Government schemes, businesses are either on hold or are continuing as best as they can under the current circumstances. Whilst this may be the less ‘aggressive’ option, it may be the most difficult in the current environment, especially as competitors or new market entrants may be bold in their actions.
  • Pivot – many businesses have evaluated their current operations to assess the viability of current products, markets and the relevant associated cost-base to emerge as a leaner and more effective business going forward. The last 12 months may have triggered a belated business health check and such businesses have pivoted to strengthen their position in the market.
  • Invest for growth – well capitalised businesses may now have significant cash reserves or access to funding at low interest rates, and possible acquisition targets may be more susceptible to a transaction depending on their circumstances. Has there ever been a better opportunity to make a strategic acquisition?
  • Get me out of here – after the trials and tribulations of the last 12 months, the appetite of running a business in a post COVID/Brexit era may be somewhat diminished. Added to this, with the widely muted change to Capital Gains Tax (incl. Business Asset Disposal Relief) absent from the March 2020 Budget, there are an increasing number of businesses looking to facilitate an exit whether this is through a MBO or sale to a third party or private equity fund.

Whilst the above are distinct and varied situations, there is one common theme throughout – the need for independent holistic advice to challenge, support and help deliver the desired outcome, whether this has changed fundamentally or not.

What is your opportunity in 2021, and are you prepared to take advantage of it?

Contact Us

If you would like further information about this topic, please contact Peter Williams, Corporate Finance Director on 0161 519 5050 or email

MHA Moore and Smalley supports MBO at business finance specialist

A North West business finance firm which brokers over £150m of lending a year has been acquired by its management team in a deal supported by MHA Moore and Smalley.

Oldham-based PMD Business Finance has been bought by three members of its executive team – Tom Brown, Lee Schofield, and Rob Dermody.

The deal allows its two shareholders and founders – Peter Dobson and Mike Rodgers – to hand over day-to-day running of the firm, though both will retain a minority stake and continue to hold board positions.

PMD is one the UK’s largest independent business finance providers, facilitating business loans, asset finance, property and acquisition finance, invoice finance and supplier finance. Throughout the COVID-19 pandemic it has arranged over £65m of CBILS facilities.

Tom Brown, director of PMD, said:

“This deal marks a new chapter in our history that will cement our position as one of the UK’s largest true independents. The PMD ethos is centred around nurturing and developing talent and providing exceptional levels of customer service. I’m looking forward to continuing these values with our new management team.”

Fellow director Lee Schofield added:

“As a team that understands the DNA of the business, Tom, Rob and I are delighted to have secured PMD’s long term future. We’ll build on the foundations laid by Peter and Mike and have ambitious plans to grow the business and become the UK’s leading independent asset and commercial finance intermediary.”

Founder Peter Dobson said:

“This is an exciting development for our people, customers and lending partners. We’ve always encouraged our people to push their boundaries to reach their potential. Tom, Lee and Rob are a testament to that and Mike and I are proud to be passing the baton over to them. I’m confident they will take the business to new heights.”

The corporate finance and transaction tax team at MHA Moore and Smalley advised on the deal, providing valuation, taxation and deal structuring advice. The deal team was led by head of corporate finance Andrew Feeke and corporate finance assistant manager Rob Holgate. Colin Abrahams provided tax advice.

Andrew Feeke, head of corporate finance at MHA Moore and Smalley, commented:

“Businesses like PMD are essential to the health of our economy and business community because they provide valued funding advice to business owners and broker vital lending to support sustainable growth.

“It’s been a pleasure to enhance our relationship with PMD further by assisting Peter, Mike and the management team to facilitate this deal, which ensures a bright future for PMD and the many businesses it supports.”

Chris Ross and Nina Latham at Mills & Reeve provided legal advice to Peter Dobson and Mike Rodgers on the sale of the business. Ben Dredge at CG Professional advised the management team on their purchase.

Founded in 2010, PMD has 42 staff and is predominantly focused on the SME sector, working directly with clients, through professional referrals and suppliers of business assets. With over 100 funding lines, PMD provides solutions for clients looking for loans to expand, facilities to improve cash flow, or those looking to acquire plant, machinery and vehicles. In addition, they also assist businesses in restructuring their debt along with providing finance to assist acquisitions, MBOs and trade sales.

MHA Moore and Smalley facilitates manufacturer’s management buyout

A Manchester-based manufacturing and engineering firm specialising in the aerospace and defence sectors has been purchased by three of its management team.

Atec Engineering Solutions employs around 43 staff at its site in Worsley designing, manufacturing, and maintaining complex control and monitoring equipment for defence land, sea, and air sectors as well as the industrial oil and gas and nuclear markets.

The management buyout has been completed without any external debt or equity funding and will allow the firm to pursue its plan to expand its capabilities within existing and new customers as well as exploring new market sectors.

Our corporate finance team helped to facilitate the management buyout. Corporate finance director Stephen Gregson led the advisory team along with Michelle Taylor and Tony Medcalf providing taxation advice.

Stephen Gregson, MHA Moore and Smalley, said:

“This deal is a testament to the excellent business Andrea has helped to build over recent years and with the new management team, Atec is well positioned for its next stage of growth.

“Both parties have been hugely helpful and open throughout the whole MBO process and we are pleased to have helped structure an excellent deal for both parties.”

Chris Ross and Nina Latham from Mills and Reeve acted as legal advisors to Atec’s management team and Katie Parker at Addleshaw Goddard advised Andrea Hough.

John Bowden will become Atec’s new managing director and will be supported by Mark Poole, operations manager and Steve Atherton, finance manager as the other two managers involved in the management buyout.

Current owner and managing director Andrea Hough will remain as chairman and will assist the team in forming its business strategy and guiding it forward in line with its sales targets as well as retaining a minority stake in the firm.

Andrea Hough said:

“This exciting announcement will allow Atec to grasp the huge opportunities in developing industries such as nuclear power.

“Atec has been a huge part of my life since joining the company as an apprentice when I left school but in John and the rest of the management team, the company has a fantastic new management team who are well placed drive it forward.”

Atec has a long history in engineering under several different brands and was purchased by Andrea and her business partner Terry Madden in 2004 following a company restructure. Andrea then became sole shareholder in 2016. John Bowden said:

“Having the opportunity to lead a business with the heritage of Atec is an honour and I look forward to the journey ahead with the support of a great team. This is an exciting time for Atec and I am sure we will achieve the success that the business deserves.”

Firm advises on Lancashire builders’ merchants deal

A successful Lancashire-based builders’ merchants with a history stretching back over 80 years has been acquired by a fast-growing independent building supplies firm.

Builders Supplies West Coast Ltd – which operates from sites in Fleetwood, Cleveleys, Morecambe and Preston – has been acquired by Huws Gray.

MHA Moore and Smalley’s corporate finance team advised Builders Supplies West Coast on the transaction. The deal enables further geographic expansion for Huws Gray which has over 100 branches nationwide.

The deal team was led by head of corporate finance Andrew Feeke, supported by Ian Waddingham and Rob Holgate, with David Hackett providing taxation advice.

Matthew Owen, head of acquisitions for the Huws Gray Group, commented: “Builders Supplies West Coast Ltd have always had a commitment to efficient customer service, which fits well with the Huws Gray ethos. We are optimistic about the future, as this represents a fantastic opportunity for us to strengthen our existing presence in North West Lancashire.”  

Owners Peter and Bethan Worthington added: “We would like to thank all our loyal customers and teams for their support over the years, and for making the company the success it is today. We’re confident that Huws Gray will take the business to the next level and we’re pleased to be leaving it in good hands.”

Ian Waddingham, corporate finance senior manager at MHA Moore and Smalley, said: “Builders Supplies West Coast has been a longstanding client of the firm. We’re delighted to have supported the owners to pass on a business they have grown successfully over many years. Crucially, this development means staff and customers alike can continue looking forward to a bright future as part of a dynamic growing business.”

Builders Supplies West Coast was established in 1938 and employs 70 staff across its four locations.

Huws Gray is headquartered in Llangefni, North Wales, where it was established with a single branch in 1990.

It has made a significant number of acquisitions in recent years and grown to become one of the largest independent builders’ merchants in the UK with 1,700 staff and branches across North and Mid-Wales, North West England, and the east of England. Its other North West branches include Bolton, Wigan, Southport and St Helens.

Huws Gray is backed by private equity firm Inflexion which made a minority investment in the business in April 2018.

Coronavirus Business Interruption Loan Scheme FAQs

1. What are the current CBILS deadlines?

The current deadline for applications is 31st March 2021. Lenders then have a maximum of two months to underwrite the proposal and provide a formal acceptance (31st May). Business loans typically need to be drawndown within 1-3 months from the offer date and asset finance / refinance products 3-6 months.

2. What facilities are available under CBILS?

CBILS is available to support business loans, asset finance, asset refinance / restructuring, invoice finance, property finance and acquisition / Management Buy Out (MBO). A lot of SMEs are unaware that CBILS is available to support expansion and growth, in addition to working capital requirements.

3. Can I have multiple CBILS facilities?

Businesses can secure multiple CBILS facilities up to a maximum of £5m, subject to individual lender eligibility criteria. Many SMEs have secured a combination of CBILS facilities from different lenders to support their business through 2021 and beyond.

4. Can I still obtain a CBILS facility if I have been declined by my bank?

Yes, just because you have been declined by your bank does not mean there isn’t a lender in the alternative finance marketplace that will support your funding requirement. There are now over 100 accredited lenders who can offer CBILS facilities.

5. Can I take a CBILS facility to build up cash reserves and settle it off if I don’t need to utilise it?

Yes, many UK SMEs are accessing the CBILS scheme to build up a cash war chest to protect themselves against any unexpected changes in 2021. With many CBILS facilities, there is nothing to pay for 12 months and no penalties for settling the agreement early, therefore the funds could be paid back at month 11 with no cost to the business.

6. Can CBILS be utilised to support an Acquisition or MBO?

There is nothing stopping CBILS facilities being used as part of a wider funding package to transact an MBO, EOT, acquisition or other such transaction requiring fundraising. We have seen funders utilise CBILS in a number of different situations, be that asset finance, invoice discounting, term loans or a combination of all three to provide funding on a transaction.

7. Can CBILS be used to restructure my existing borrowings?

Yes, many business owners are using the scheme to restructure their existing borrowing structures and benefit from low or no payments for 12 months to reduce their outgoings. Restructuring your current debt profile under CBILS can help safeguard your business in the long term.

8. Can CBILS be used to invest in new equipment?

CBILS funding is available to support businesses who have been affected by COVID-19, but also those who are now looking to expand and grow. Many asset finance lenders have access to the CBILS scheme where the first year’s interest and fees are paid by the Government on hire purchase or finance lease agreements. With the Annual Investment Allowance extended to £1m for 2021, it may be the perfect time for some businesses to invest.

9. Can I have a CBILS facility alongside my invoice finance facility?

Yes, on any CBILS facility up to £250k, the facility is fully unsecured and can sit alongside any invoice finance facility. CBILS lending may be available through invoice finance providers who can provide a CBILS business loan alongside your working capital facility.

10. Will there be a successor scheme to CBILS?

The British Business Bank has stated that there will be a scheme that replaces CBILS, however it has been indicated that the terms may not be as attractive as the current scheme.

The Coronavirus Business Interruption Loan Scheme (CBILS) is managed by the British Business Bank on behalf of, and with the financial backing of the Secretary of State for Business, Energy and Industrial Strategy (BEIS). British Business Bank plc is wholly owned by HM Government and is not authorised or regulated by the Prudential Regulation Authority (PRA) or the Financial Conduct Authority (FCA). Full details on CBILS and the list of participating CBILS lenders can be found on the British Business Bank website at:

If you would like to discuss the above content, please get in touch with our expert Corporate Finance partner Andrew Feeke on either:

T: 0161 519 5050

MHA Moore and Smalley oversees family-owned lubricant distributor’s sale

A long-standing distributor of industrial and automotive lubricants has been purchased by a leading UK firm in a deal supported by MHA Moore and Smalley.

Broughton Lubricants, based at Walton Summit, Preston, employs 24 staff and distributes Castrol and other industrial products across the UK.

The company has been sold to Certas Energy, the UK’s leading independent distributor of fuel and lubricants. The deal will allow Certas Energy to further strengthen its position in the market, particularly with the Castrol brand.

The Hodge family, which currently owns Broughton Lubricants, will exit as part of the transaction.

David Hodge, CEO, said: “This transaction will allow the business to build on the continuous growth of the last few years.

“Certas Energy are gaining an excellent team to continue offering the same excellent service which the customers have come accustomed to and are now well placed in the UK to grow the market share even more. I wish all our staff and customers best wishes for the future.”

The company was advised on the sale by accountancy and business advisory firm MHA Moore and Smalley. The transaction team was led by Ian Waddingham (corporate finance senior manager) along with Paul Williams (partner) and David Hackett (tax director).

Harrison Drury provided legal advice to Broughton Lubricants on the deal. The deal team included corporate solicitor Jack Stephenson, employment specialist Kate Shawcross and property specialist Amanda Marwood.

David Hodge added: “I would like to thank MHA Moore and Smalley for their usual professionalism in dealing with the sale, the same for the team at Harrison Drury.”

Ian Waddingham, MHA Moore and Smalley said: “The Hodge family has been a client of the firm for a number of years. We’re pleased to have worked alongside them on an important transaction and gained an excellent result.

“The purchase is also an important one strategically for Certas. Taking the reins at Broughton Lubricants will help the company as it looks to further growth in the coming years.”

Warrington-based Certas, which employs around 2,300 UK staff, is a subsidiary of international sales, marketing and distribution firm DCC PLC, a FTSE 100 company.

Tony Stewart, managing director, European lubricants, Certas Energy said, “We believe that this acquisition will create value both for Certas Energy and our customers. It will strengthen our position in the industrial lubricants market, which is an important part of our strategic vision for the future.”