Market Update - September 2024

Hello, and welcome to this month’s Finance Market Update.

In true typical British fashion, I will talk about the weather. Summer is well and truly over, and I may have to invest in a kayak for my commute!

There are signs of market improvement, and confidence seems to be returning – or at least for now, as all eyes are firmly on the upcoming budget this month. We’re continuing to see demand for finance professionals with M&A experience as more companies explore exit or stock options. We also review something our network has been discussing recently – system implementations and the knock-on effect of a poorly managed process.

Read all that and more below.

Market confidence comeback amongst CFOs

The latest findings from Deloitte’s Q2 CFO survey show signs of confidence returning to the market. In fact, business confidence has increased for the fourth consecutive quarter, rising to 23% of CFOs who are more optimistic about their business's financial prospects.

The issues that have weighed heavy on most financial officers over the last few years, including Brexit, COVID-19 and inflation, seem to be subsiding. According to the figures released, UK CFOs’ perceptions of external uncertainty fell to their lowest level in the last eight years, and expectations regarding corporate revenues rose to their highest point in two and a half years.

A less volatile market appears to have boosted spirits, and alongside the more positive sentiment, the appetite for corporate risk is also up, seeing its biggest rise in the last four years. These are all incredibly positive signs for growth across the sector.

While it’s fair to say most CFOs have entered the second half of the year with confidence, we know that many business leaders are still awaiting the outcome of the upcoming October Budget. Of the CFOs we’ve spoken to in the last six weeks, reducing cost and increasing cash flow are still top priorities right now to further improve business stability. It’ll be interesting to see what the Chancellor outlines in the Autumn Budget and the impact this has going into the new year.

M&A and exit experience requirements are on the rise

Last month, we briefly touched upon the uptick in MDs looking for people to lead on exits over the next few years. We’re continuing to see increased demand for senior finance candidates with a proven track record in managing the exit process and due diligence for both trade sales and PE acquisitions. Having an experienced FD/CFO who understands how to maximise value within a business and impact the revenue and potential multipliers at exit is hugely sought after.

While IPOs have taken a backseat over the last few years with market unrest, we’re beginning to see green shoots reappear as more companies are getting IPO ready. There are talks of some of the UK’s largest FinTechs, including Revolut and Starling Bank, bolstering their teams ahead of potentially listing.

Candidates with a strong corporate finance/ mergers and acquisitions background are being sought after for interesting opportunities, particularly to lead on buy and build strategies. Several of our PE-backed clients have capital to deploy to grow their businesses, ranging from acquiring businesses to bring new products to market, to expanding into new countries with ready-to-go operations. We expect to see demand increase as the market bounces back and there are more opportunities for mergers and exits.

System implementation failures

A client once said to me, “If you think implementing a system is expensive, wait until you’ve had a failed implementation”.

The cost to correct a failed implementation can more than double the initial outlay, with system reviews, consultancy fees, and contractor costs. The financial cost directly associated with the system is one thing, but multiple other factors must be considered, including the workload and impact on the project team's morale, not to mention damages to staff retention and ongoing activity that requires the use of the system.

Failing to hire the right specialist to lead an implementation or to fully resource the project can have huge implications. If you’re planning a system change, there are a few things to consider:

1.????? Define Clear Objectives: Establish the specific goals of the new system (e.g., process automation, reporting improvement, compliance).

2.????? Assemble a Cross-Functional Team: Include finance, IT, project management, and key stakeholders to ensure alignment and holistic decision-making.

3.????? Assess Current Systems: Analyse existing financial processes, systems, and data to identify gaps and areas for improvement.

4.????? Select the Right Financial System: Research and choose a system that aligns with business needs, scalability, and integration capabilities.

5.????? Create a Detailed Implementation Plan: Define the project timeline, phases, deliverables, and resource allocation. Set clear milestones.

6.????? Data Migration Planning: Ensure thorough planning for data migration, including data cleansing, validation, and mapping from legacy systems.

7.????? Customise to Business Needs: Configure the system to meet specific business requirements while avoiding unnecessary customisation that increases complexity.

8.????? Integrate with Other Systems: Ensure seamless integration with other business systems such as ERP, CRM, and HR systems.

9.????? Test Extensively: Conduct thorough testing (unit, system, and user acceptance tests) to identify and resolve issues before going live.

10. Train Users: Provide comprehensive training to end users and system administrators to ensure they understand how to use the system effectively.

11. Plan for Change Management: Communicate the benefits of the new system, manage resistance, and ensure stakeholder buy-in throughout the process.

12. Monitor Post-Implementation Performance: Track system performance, user adoption, and process improvements, addressing any issues that arise.

13. Provide Ongoing Support: Establish a support system for troubleshooting, updates, and system enhancements after go-live.

Finance community events

As a partner to the finance industry, we’ve been hosting networking meetups and events for the last few years to help connect industry leaders and share best practice amongst our senior finance community.

With an active community of more than 150 members, we regularly get together virtually and in person. Our last event focused on pensions, specifically wealth management and pension planning for individuals and companies. You can get the highlights from the session here https://absolute-recruit.com/wp-content/uploads/Absolute-x-Fortis-Financial-Pensions-Webinar.pdf

If you’d be interested in finding out more about our future events, please get in touch.

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 here.