Court Guinness//The TradeHouse

Market Comment July 2020

Court Guinness resurrects an old column he used to write in which he takes an opinionated and sometimes irreverent view of what he sees in the market place.

In this issue he looks back at the past few months and tries to looks forward to the rest of the year.

Since the last Market Comment Zoom and Teams have taken over from early morning motorway dashes and it is clear that people are getting very inventive in their use of these tools to keep business and dealmaking going. I do miss early morning motorway runs though. Lockdown is easing and we are all slowly rising from the abyss. The pub trade I am sure will enjoy a wondrous return in terms of their tills this coming weekend but in some cases this will not be enough to balance the books. I am certainly looking forward to a proper pint of Abbott!

I have taken in a further £2.5 million since the deadline passed and these will on the website shortly. The September issue looks like it will be very full indeed!

The recent news from the retail sector is very chilling 12,000 jobs have been lost in the sector this week alone. I keep harping on about this but I wish the whole sector would wake up and smell the coffee! This applies to the likes of INTU and Hammerson too! We are still waiting to hear more about INTU’s fate. Let us be clear the physical retail sector is most definitely in intensive care and is headed for the mortuary.

The big thing to watch out for will the government’s Autumn Statement. The view here is that the tax bands will be contracted. It is thought that the 0% band will reduce to £10,000 and the 40% band will reduce to 45,000 amongst other things. Be clear the government cannot afford its spending on COVID-19 initiatives and will need to bring more money in to pay for it. I have heard rumours from political analysts that a huge VAT rise might also be on the cards.

What these changes might mean yet nobody knows. The government have treated the self-employed and small business owners in a fairly shabby fashion whereas full time PAYE staff can be furloughed. Quite a few businesses in this issue have had their prices reduced. There has been a lot of advertising in this issue and a large number who have missed the deadline.  I think values will reduce further but it is too early to say.

Property values will slide and it depends who you listen to as to what answer you get. This office has heard anything from 4-40% drop. One nutter has predicted a 10% rise! It is also important that EU negotiations are not complete so one knows the state of import and export yet and the effect it could have on the types of businesses that are advertised in here.

One thing that has become very prevalent is the rise of the chancer. I have heard stories of the sudden drop tactic resurging – This being demanding a massive drop in price at the 11th hour prior to completion and another tactic of requiring expensive lease extensions and other costly works prior to exchange as a condition of offer. Only 2 days ago I had to rush to the aid of an old and good friend who nearly had to kiss goodbye to nearly £50k because of this second tactic.

There have been some peculiar happenings in the property sector with a large amount of properties at auction achieving unbelievable percentage rates above guide prices.

In the darkness there has been a little glimmer of light for the freelance and independent sector. A light from a pen torch as opposed to the big xenon headlamps the sector really needs. IR35 in the private sector has been delayed for 12 months. The sector is in a bad way. Many independent contractors are “benched” at moment and there is very little new work out there. In addition to this we have heard a rumour that one of the largest umbrella company/payroll services providers is likely to have to call in either additional support or the administrators. This should be a wakeup call to all freelancers and independent contractors:  You have until next April to sort your s*** out unless you want to be hit by IR35 and there is no use complaining ad no excuses now! There are plenty of other opportunities available out there! There does not seem to be an appetite to change ways and some parts of the sector are dangerously burying heads in the sand. I have said for years that this change will mean the end of some parts of the recruitment sector and I can foresee a number of recruitment agencies on the market in the next 12 months.

Let us now move on to the concept of the side hustle. This is now a serious thing, so much so that I have decided that side hustlers should have their own dedicated section in this magazine.  This will grow in future issues. On a serious the concept of the side hustle is one to be commended and one that is showcasing the creativity and ability of side hustle owners and operators and this is to be commended. I often bang the drum on small business marketing and how poor some of it is but I do have to credit some of the side hustles I have seen for the effort they have put I to marketing. I do honestly believe that this sector will start to change the rest of the small business sector in terms of marketing. There has been lots of lovely new stuff coming through in lockdown on the side hustle front. I am quite impressed with some of these and they do show real flair.

A number of other issues have reached the office recently. Firstly, is the state of the British expatriate business market in Spain, we are starting to see a number of businesses being advertised for sale or closed and values and advertised asking prices are contracting sharply. This is the second period on the bounce where this has happened.

Concerns have been raised about the state of the personal and domestic care market especially in the area of financial management and delayed receivables. Budget holders are apparently holding onto payments, be warned! Some domestic care providers might be forced to close.

We have also heard that a bank favoured by the business and property communities are tightening their lending criteria and planning to shrink their loan book.  We have also heard a rumour that a major pub operator is planning to shrink their estate by 30% imminently.

The more unusual enquiries keep coming in and I am proud to be advertising two Embraer jets in this issue. We also get a number of crank calls. In the past I have been asked to advertise the England football team, Heathrow Airport and an investment company owned by a conservative MP! However, the prize must go to the Irishman who telephoned wanting an advertising slot a few weeks ago. He said: “I can’t tell you the name of the business or what the business does I just want you to sell it for €10 Million!” Yes, he really said that!

Market comment is written only a few days before publication of The Trade House Magazine. A slightly worrying theme is starting to develop. The January issue was written 2 days before a general election, the March issue was written when I was at the Accident and Emergency department at Warwick hospital and this issue has been written in lockdown and unfortunately from my sick bed – thankfully it is not Covid but a resurgence of a long standing issue. I wonder what will happen for the next issue!

When this current situation is all over I shall be running some “meet the readers’ events” and I would be delighted to meet as many of you as possible at these events. I should like to run these vents in London, Birmingham and Manchester to start with.

I am still publishing The Trade House Magazine every other month and this will continue for the foreseeable future. I will however publish a Market Comment on a monthly basis on this website.

Please note that I am always delighted to hear reader’s views about this column or any other aspect of the work of The Trade House.

I look forward to speaking with you all again on a regular basis between now and the end of the year.

Happy dealmaking!

Regards

Court

The Trade House Magazine is below.

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