Sarah Fatchett, Founder of 365 Response, participated in an interesting online webinar that focused on the impact of COVID-19 on corporate finance and businesses, all the way from the top to the bottom. The Business Desk accurately described the sector as one that “is symbolised by the handshake,” but social distancing and intense pressure on global health institutions has forced change. A market that used to hinge itself on close personal connections and frequent meet and greets must now test new waters to survive.
Christian Hunt, partner at Bevan Brittan, said: “There’s definitely a sea change over the last six months in relation to how deals are conducted, both in terms of dynamics around how enhanced due diligence is actually dealt with and the whole concept of not having face to face meetings, with negotiations being done over Teams or Zoom type platforms and, even distanced completion meetings as well, with changes to how you get buyers, sellers and funders to actually execute documentation.”
Understanding the culture within a business and securing a deal that benefits both parties is still just as vital as before, especially if you are acquiring that business as part of your overall growth strategy. Unfortunately, with the current digital approach to meetings, it can be difficult at times for some to truly experience what a company has to offer.
Richard Coulson, chief executive of Complete Office Solutions, was keen to promote the importance of maintaining some of the business processes used pre-pandemic, stating: “It’s still important in the deal process that elements are face to face at some point.”
Richard expressed his belief that most deals that are finalised within a virtual capacity would have been put in motion before the nationwide lockdown, although he admitted that there would be obvious exceptions to the rule, and 365 Response proved to be just that!
Sarah, who was able to secure an incredible deal during lockdown, said: “The virtual process was different from the ‘norm’ that I’d heard about. It was quite complicated, longer, perhaps more intense actually, because it was just one team call after another after another after another. But I would recommend doing it. And we’ve learned a lot through the process.”
The Impact of Covid-19
365 Response and Complete Office Solutions are great examples of how Covid-19 has impacted businesses in a variety of ways. Sarah was able to secure a £3m investment from the Business Growth Fund (BGF) with the support of her team, which will be used to ensure the business is able to continue scaling up and increase both the commercial and operational teams. She said BGF worked well with herself and her team throughout the process, supporting the “virtual deal management.” This enabled her to take the time to choose the right fit for her and her team. One thing Sarah does not shy away from is admitting that, although the news is positive, there are still many challenges that she has had to face along the way.
She said: “I know colleagues in other industries and other firms that have started-up are having really difficult times and having to suffer furlough and all sorts of different types of restructuring. We’ve had a different type of challenge, one of rapid growth, and the need to quickly support people working in completely different models. We were [prior to lockdown] quite a tight-knit team working together, and then suddenly we’re spread out and working remotely which brings a challenge to that sense of team especially while experiencing rapid growth.”
Jason Whitworth, a corporate finance partner at BDO, explored the areas in which the market appeared to be booming, which he said included technology, life sciences and online service businesses. The growth within these sectors shows us that there is an “absolute appetite” for support from a range of funders, and that the current market shifted the power balance for “those really good opportunities out there” that would have funders “knocking on the door of those good businesses, desperate to do deals”.
Acquiring deals during the ongoing pandemic is a difficult task faced by all business leaders, but it is how you face those challenges that matters most. Richard’s Complete Office Solutions is a key example of facing those speedbumps head-on. Despite having made multiple acquisitions in previous years to support its rapid growth, Covid-19 introduced a drastically different environment, and the impact highlighted the ways in which they would need to adapt. As a direct result of the pandemic, he has had to consider making redundancies for the first time in over 20 years.
Richard shared: “We’re a business that supplies services into offices, so we did see a huge impact to our revenue initially.”
The global situation has placed business leaders in a difficult position, where Richard says they “have to make a decision on whether they right-size their business, or whether they invest to cope with a growth that they’ve seen if they’ve seen it.” Richard’s own confident business decisions led to the firm retrieving some of their lost revenue once lockdown eased. This was achieved utilising a combination of different strategies, including using data differently to inform and manage rapid decision making, being able to pivot and lead through difficult times and staying strong and clear for his teams. That ability to make difficult decisions during unprecedented times is what makes a true leader, especially when the stakes have never been so high.
The stress and fear felt by business leaders also trickles down amongst their employees. These uncertain times have placed everyone in a precarious situation, and the issue of employee burnout is more present than ever. Sarah discussed the importance of identifying workforce needs during the current crisis and remaining aware of the potential for burnout, stress and other mental health issues, as well as redesigning workforce contracts to account for the changing needs of employees. As a leader, Sarah frequently encourages her employees to take care of themselves in the ways that they need to, and to ask themselves “what good have you done today?” – an exercise she hopes promotes kindness both on an individual level and within the wider group. Regular 365 Response events such as coffee mornings, charity events or after-work drinks have been brought into the virtual world to preserve a level of closeness between employees, as well as discussions amongst management regarding potential employee initiatives to promote mental health wellness.
As the days go on, it’s clear that the nations collective mental strength and wellness isn’t the only thing that’s suffering. In this new world, the health and economic situation maintains a fluidity that makes it difficult to make long and lasting decisions. For Christian, he believes the secret to maintaining a level of security is to ensure that whatever happens, both investors and buyers will be conducting “enhanced due diligence” and utilising IT systems with increased protection. This idea that ‘Data is King’ is more important than ever as the world is forced into a more digital landscape by the virus, and the dangers and complications that come with that are exposed more regularly. Using a comprehensive and up to date system is crucial when making an evidence-based decision. Advanced reporting tools, such as the ones used within the 365 Smart Platform, are precious features that put you in control of the data and present it in a way that is accessible to all.
Navigating a Deal in the Midst of a Pandemic
One thing that helps 365 Response continuously play to its strengths is that Sarah has completed her Gold Command training, which she believes has truly helped her navigate Covid-19 and its impact within the workplace. The training is “designed to provide a legislative and practical framework for strategic level command in emergencies and major incidents, where a multi-agency response is required,” giving her the power to make strategic decisions in high-intensity situations, despite the pressure to succeed. Additionally, many team members have worked within the healthcare sector previously, or have specific experience working with or alongside Local Authorities, Ambulance Trusts, SEN transport providers, GP’s and social prescribing, enabling them to understand the needs of these sectors on a more personal level. Maintaining and continuing to grow that market knowledge and insight is essential to ensuring your product can serve its customers in the best way possible.
Ultimately, what the pandemic makes clear is that there is no way to avoid the inevitable rise in distressed businesses and their employees, disrupted deals, mergers and acquisitions, and implemented changes within the structure of the business itself, but that doesn’t mean that all hope is suddenly lost. There’s potential for businesses and the people that help it thrive to not just survive but grow with purpose, hope and strength. It won’t be an easy journey, but it’s possible with the right mindset, a product that speaks to the needs of its buyers, and the initiative to plan and prepare for all potential outcomes. One truly valuable point we can take away from this shared global experience is that we can lean on others, even work together with others in our network who we may consider competition, and find a way to support each other in a way that benefits both. Doing so keeps the industry and the economy thriving, and as Sarah says, “it’s not necessarily the time for competition”. If that’s the case, then perhaps it’s time we all ask ourselves a question – what good will we do today?