Market Update - April 24

Hello, and welcome to Absolute’s Finance and Accounting update. This month, we’re pleased to report a new sense of optimism in the market. Interest rates are holding steady, inflation is continuing to creep down, and more vacancies are coming to market.

That’s not to dismiss the fact that there are still challenges facing those who are looking to hire finance staff. We’re seeing a much higher volume of candidates applying for roles, and this comes its own challenges. However, it’s good to see more people reviewing their options and keeping the market moving.

This month, we’re focusing on investments and how they’re shaping the market. With VC and PE investments on the rise, we’re seeing more growth-focused roles appearing, meaning there’s more movement amongst senior professionals.

VC investment showing promise

The beginning of 2023 was an incredibly tough time for companies wanting to raise VC investment. With investment being paused over COVID, the boom that followed in 2021 and 2022 was unlike anything we’d seen. The economic disruption at the backend of 2022, going into 2023, saw the investment market level out and left a number of companies being forced to make redundancies.

However, as of H2 last year, VC investment began to spring back, and experts are optimistic that things are changing for the better. Angel investment, particularly, is on the rise and is helping sustain the early-stage (seed / pre-seed) funding rounds. In the UK, this is largely due to SEIS and EIS, which incentivise angel investors to invest and benefit from tax rebates of 30% - 50%.

Looking at core growth areas, AI and climate tech are the biggest pull for funding right now, with 29% of all UK VC investments heading to companies in those areas. While investment is crucial, so is having the right people to facilitate the growth needed to get the return. A lot of start-ups paused growth hiring in 2023 and typically focused on replacement roles. Only a few months into 2024, we’re already seeing positive signs that more new growth/expansion roles are being considered. There’s more talk of exit planning, moving to new markets and long-term sustained growth across the board.

If you’re a senior finance leader with buy-out/growth experience, we expect you to be in high demand.

UK PE investment is on the rise

As more companies have struggled to list their businesses on the stock exchange over the last 18 months, we’ve seen an increase in exits to PE firms. With BDO suggesting the market for IPOs at the earliest might be Q4 2024 – Q1 2025, a PE buyout is a more attractive proposition for those looking to exit.

Though some firms remain cautious with longer deal cycles having led to more mature / exit-ready companies sitting in their portfolios, the fall in interest rates is increasing confidence in the market.

Amongst investments, tech remains a priority – particularly across cloud computing and software. We’re working with several PE-backed SaaS companies, where the PE firms are funding acquisitions to move into new markets (particularly the US). As such, candidates with prior experience within a PE-backed business are always in demand, especially if they have been through the full PE lifecycle.

AI is still a talking point, but we’re seeing more caution on the PE investment side regarding which businesses to favour. We suspect that more investment will be siphoned into this area as the market matures.

There’s a lot of opportunity with carve-outs and bolt-on businesses, so finance candidates with strong M&A experience are always in demand.

From our perspective, we’ve been working with businesses to find senior finance and leadership hires, to prepare ahead of potential PE Investment and ensure they have the skills to manage the process of an investment deal. This means transformation specialists are also in demand right now, with requirements for them to help streamline the processes and systems across the business either for improved efficiency or readiness for investment.

As we mentioned earlier, it’s encouraging to see a number of growth roles coming back to the market; we’ve had several mandates to find senior finance professionals to help lead expansion into new territories and to oversee M&A projects and we expect to see this continue.

R&D Tax Relief Changes

In light of this month's update that HMRC has made to Research & Development (R&D) Tax Relief, we wanted to share our recent webinar co-hosted with Evelyn Partners, where we discussed the intricacies of R&D Tax and how businesses can prepare future claims.

If you weren’t able to attend and you haven’t done so already, you can download the webinar recording and presentation slides?here

Thank you for taking the time to read our senior finance market update. As always, if you would like any advice on hiring, candidates, salary benchmarking, or a general chat about the market or to discuss your next role, you can now book a 30-minute call with me using this link –?https://calendly.com/ashley-absolute-recruit/30min