Businesses have now faced more than two years of uncertainty thanks to the constantly-changing environment caused by the Covid 19 Pandemic.

It is estimated by Begbies Traynor in its latest Red Flag analysis that in the third quarter of 2021 562,550 businesses were in “significant financial distress”, with a 17% rise in “more serious critical business distress”.

What businesses need, therefore, is some measure of calm and steady progress as far as any business can ever rely on these things.

Investors are among the most important in providing these conditions.

But for years now, many investors have been what are called “rentiers”, interested only in short term gains from the money they put into a business without being particularly invested in the future of that company.

Rentiers are deemed to be willing to shift their money elsewhere if they feel their rewards are not large enough or fast enough.

While no business would deny that it has obligations...

The UK’s largest investors put environmental concerns and corporate governance issues as top of their lists when considering companies in which to invest, according to research by EY.

However, the respondents awarded a “could do better” to such areas as audit, corporate reporting, trust, and reputation, according to a report on the research published by CityAM.

Clearly the activities of campaigners like Greta Thunberg and Extinction Rebellion have significantly raised awareness on environmental issues.

But the profile of environmental concerns is also being raised by the annual world summits on ethical finance, the most recent of which was held in Edinburgh in early September and was attended by senior representatives from more than 200 companies and organisations.

The summit is organised by the Global Ethical Finance Initiative, which oversees, organises and coordinates a series of programmes to promote finance for positive change.

In early October, Mark...

A mature business cycle is one where the prevailing conditions are such that any economic slack is largely used up and assets are richly priced after a period of expansion.

Arguably this is the position in which the economies of the developed countries, such as the USA, UK, EU and Japan now find themselves, where there is a stable population and slowing economic growth. In this context a growth rate of 2% is seen as acceptable.

Arguably, too, mature economies are at a pivotal moment, in that a market economy is never static and there have been signs for some time that the situation is somewhat volatile, as a selection of headlines in any period illustrates.

For example, on April 28 a new report on global trends published by KPMG Enterprise suggested that increased activity from venture capital investors had been pushing up deal prices in the North of England, and the billionaire investor Warren Buffett told the Financial Times that he is “ready to buy something in...

This blog contrasts the fortunes of Majestic Wines with those of Debenhams as arguably examples that show how retail business can survive a rapidly changing environment.

There have been efforts by many struggling High Street retailers to improve their businesses by using an insolvency mechanism called the CVA (Company Voluntary Arrangement).

The most recent of these is Debenhams, which, having secured £200 million in new loans in March and followed with a pre-pack administration sale in early April, effectively wiping out its shareholders including the vociferous Mike Ashley who also owns Sports Direct and BHS.

It was acquired by new owners, a consortium of banks and hedge funds, who almost immediately launched a major store closure programme ultimately to involve 50 stores, in conjunction with a CVA aimed at persuading landlords to reduce the rent for remaining stores by up to 50%.

Debenhams’ sales had dropped by 7.4% in the previous six months but it has been...

Perhaps the most high-profile business collapse of the year has been the construction giant Carillion, reinforcing the message that no business is too big to fail and that no-one is immune to investment failure.

It prompted questions over the integrity of its auditors KPMG, who in March 2017 had expressed no concern over reported profits of £150m, even though four months later these proved to be illusory.

It also prompted an exodus of investors once the company’s debts became clear and confidence in its viability plummeted, thereby precipitating the collapse.

But should the investors have known better than to trust a business that diversified into a range of disciplines outside its core competence and embarked on a series of take-overs?

There are many causes of investment failure. It is not a precise science and it does involve a degree of trust, not to mention emotion. Too many investors fail to carry out due diligence before they decide where to put their money.

So,...

Ten years after the lending culture that resulted in the 2008 Great Depression it seems that the behaviour of some investors is no less predatory and unscrupulous than those of bankers 10 years ago.

Recently FanDuel, a fantasy sports site, was sold by its Private Equity investors to Paddy Power Betfair for $465 million. So far so good. However, despite the sale price the ordinary shareholders got absolutely nothing.

The background to the investment is that the business was regarded a Unicorn company (a privately-held start-up valued at more than $1 billion) with it having more than 6 million daily customers in America.

Two Private Equity investors, KKK and Shamrock Capital, provided funds, based on a valuation of at least $1 billion. However, I am sure that the actual investment was based on a mix of debt and equity with a tight agreement that included a drag-along provision that was binding on all shareholders and allowed them to force...

The Government recently proposed expanding its powers to review and intervene on foreign investment in UK businesses.

Under the proposals, which are subject to consultation, the Government’s remit would cover all UK businesses including SMEs, where previously it could only review proposed deals where there were national security implications. It would include powers to block takeover deals across all sectors of the economy.

The UK’s plans are reportedly in line with efforts in the United States, Germany, France and Australia and relate to concerns that China and other rivals are gaining access to key technologies.

How does foreign investment affect the UK economy?

The UK’s current account is a measure of the economy’s health.

It is calculated by adding up the goods and services of our exports and the income earned by the UK from overseas investments and subtracting those goods and services we import, income paid overseas for investments in the UK and the...