Contrary to popular belief, the current Brexit uncertainty has resulted in an investment market where funding appetite is higher than ever for the right business.
Ahead of the referendum there was increased fund raising activity among UK private equity funds, as fund managers were keen to avoid any uncertainty around their own business in the period following the UK leaving the EU. This has resulted in a large number of freshly raised funds, and with several large funds still in the market for additional capital, the cash overhang in the private equity industry is now likely to be larger than it has been for many years.
The oversupply of capital has however been faced with a reduced demand in the market as business owners delay investment and growth decisions in the face of Brexit uncertainty. The inevitable result is that there is more capital chasing fewer opportunities and that good companies in the market have raised substantial amounts of capital at very strong valuations as competition among funders intensifies.
Although companies which rely heavily on exports or imports may face reduced funding appetite in the short term, businesses with a predominantly domestic business model will find that now is an optimum time to seek investment as investors are keen to deploy their fresh capital.
Cavu raised substantial amounts of private equity for clients during March across three deals which attracted strong interest and valuations from the private equity sector. The commonality between the transactions was that our clients operated predominantly domestic business models where any Brexit impact was likely to be marginal.
If you are considering accelerating your company’s growth through an investment, this could very well be the perfect time to approach the market, despite any uncertainty of what will happen in October (our presumption is that it will go to the wire!).