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In A Tale of Two Cities and in the context of the French Revolution, Charles Dickens famously observed that it was ‘the best of times and the worst of times’. Fast forward to the present time and there may not be a revolution, and no-one is at risk of losing their head, but relationships with our French friends have been far from cordial for some time and who would have predicted the recall of the French Ambassador to the USA?
Strange times and “Keep the Head” might be a more appropriate motto for today, not just in geopolitical terms but in all areas of life, including business.
It has been a challenging and, at times, dismal experience these last 18 months and, for many, there has been uncertainty, which continues to affect many areas of business, and most obviously the hospitality industry. Yet that gloom is counterbalanced by the many innovations that have been inspired during the lockdown which makes this the best of times.
As we emerge from the worst rigors of the Covid-19 pandemic, or learn to live with it, change will be the constant. It cannot be avoided, so embrace it to succeed or fear it and fail. Across all industries, there has been change and that will continue apace. Those businesses which have adapted to the current market have always prospered and that will be the case even more so today. New working patterns and ways of communicating, together with technological advancements, are our challenge and opportunity at the same time.
The legal industry, always slow to change, has even embraced the new normal and there remain exciting opportunities for those who dare to believe. As always, any lawyer is only as good as his clients and that is especially in the areas of practice in which we advise. In the last 18 months, we have been inspired by the ways in which our clients have responded to the landscape before them and have chosen to establish their distinctive footprint. Our clients have withstood the worst excesses of recent times, and so have we, and as they make the best of it, so do we.
But while it was initially about survival (and sadly that remains the case for many), it is now about growth. In the private equity arena, deal flow has bounced back and the market has demonstrated resilience. Deal making has continued apace, almost without interruption, and the usual summer down-time barely happened. Most commentators believe that these activity levels will continue and, if companies continue to grow earnings over the next two years, there will be plenty of deal activity.
All the more reason to make hay while the sun shines.
For some companies, there will be further challenges ahead as Government support introduced in response to the pandemic is removed. That support, together with low interest rates and sufficient liquidity, has sheltered many businesses from the worst excesses. Supply chain issues and increased costs caused by inflation, which may not be able to be passed on to the end customer, are a real concern and many will not survive. It is what emerges from those that will determine the strength of the economy in the future and, no doubt, there will be many opportunities too.
For business owners with an exit horizon, the threat of changes to Capital Gains Taxes are obvious and that will undoubtedly fuel exits. However, changes to CGT also present problems for early stage companies as there is the likelihood that private investors who have invested in unquoted SMEs may well reduce their exposure to that asset clause, not to mention a dampening of enthusiasm of entrepreneurs.
Planning ahead has never been more important and being ready for whatever next appears over the horizon, or creeps up from behind, an imperative. The best of times can be the worst of times for the unwary and unprepared and, the worst of times, the very best for the alert and imaginative.
Now is the time to act, so run like the Dickens!