Why businesses can feel more confident about decision-making in 2024: Ben Kimball

That especially goes for retail and hospitality companies hoping the so-called ‘golden quarter’ of the year – which is so vital to many firms – sees them ending up in the black overall.

It’s fair to say that I don’t think the song would have worked quite as well as ‘Black Christmas’, but perhaps that’s why I work in business lending rather than songwriting!

While many of us are now enjoying some much-needed downtime between Christmas and New Year and planning ahead for next year, many businesses will be hoping the economic forecast is fairer in 2024.

Following Covid, companies have had to manage the onslaught of higher energy costs, ongoing recruitment and staff retention issues, stubbornly high inflation alongside increasing interest rates.

You only need look to the insolvency rates, particularly among small and microbusinesses, to see that for a lot of companies the pressure has simply been too much.

One key measure to understand confidence is in business investment and acquisitions.

Industry data shows a mixed picture.

M&A volumes are considerably lower, down 30 per cent on last year. Yet, deal sizes are on average slightly higher.

I would say this is down to caution.

Deals are taking a bit longer to complete and with the Base Rate moving from 0.5 to 5.25 per cent since the spring of 2022, business advisers and management teams have been more careful and trying to understand the macro environment.

But, of course, there are many businesses in the region that have had a great year.

For example, take the IFA and wealth management sector.

Alongside a growing need to invest in digital systems and comply with more regulations, there are many directors approaching retirement, who’ve decided that now is the right time to find a new partner to sell to.

This year we helped fund deals to support M&A in this sector.

It’s a similar tale in healthcare, professional services or IT and technology.

Looking ahead, 2024 will not be without its challenges, but it also brings new opportunities.

Deal planning for next year is well underway, we’ve seen an uptick in deal conversations in the last month alone.

While a likely election next year adds an element of uncertainty, broadly speaking we’re expecting a more stable year.

As inflation and interest rates stabilise, and management comes to terms with the new cost of capital and what that means for valuations, businesses are feeling more confident when it comes to making plans.

Ben Kimball is business development director for alternative lender ThinCats, a firm with offices in Sheffield.