Corporate Finance professionals must be able to keep up with emerging trends to best advise their clients. But what lies ahead for the sector itself and how are skillsets changing? Here to shed some light on the future of corporate finance is Chand Chudasama, Strategy & Corporate Finance Partner at Price Bailey.
How has technology and data changed Corporate Finance and Strategy?
Undoubtedly there’s a huge amount of data out there, and most corporate finance and strategy outfits have bought access to it through aggregators. It’s inexcusable to ignore the data that’s there. However, it’s not enough.
Whilst the quantity and quality of the data available is increasing, the clients themselves are gaining their own commercial rigour. Many have come from industry and, armed with this easily-accessible data, in many cases their insight is better than the consultants’.
Combine this trend with the fact that many corporate finance forecasts are still based on optimistic growth assumptions that lack data-driven evidence – you see projections of revenue and margin going up, which looks great, but isn’t an accurate picture.
To keep pace, and to stand out in a competitive market, we need to do something different. When I took over the strategy team at Price Bailey, I wanted to create an insights and research team that took an innovative approach. We now focus on building primary market research into how a business could grow in different markets, and how it could be valued as a result. For example, we do price and market testing around the world, turning that evidence into projections that have a real rationale behind them. It’s a combination of qualitative and quantitative data that offers a far more credible and useful picture to the client.
What about further into the future of corporate finance, what might be three things to look out for?
It’s a continuation of what we just discussed:
- The amount of data will increase but the number of people who can connect that to value creation will fall. Data will proliferate but people will focus too much on that and forget to ask the ‘so what’ questions.
- As clients become savvier about corporate finance, consultants will need to expand their knowledge to stay one step ahead and continue adding value. Traditional advisors who have only ever worked in finance will struggle to command premium fees, as we see a rise in recruits joining the business from outside the industry and bringing skills such as sales, marketing and increasingly, technology. We’ll still need lots of ACAs, but the expectation will shift and people will need to demonstrate complementary skills.
- If advisors can’t think on a global scale, they will struggle. If I think of the international deals we do now, compared to six years ago, the number has increased exponentially. We have embraced that, and we use technology and support teams to facilitate our work. If you can’t think globally, you’ll be limited in your growth and miss out on huge opportunities.
What has been the impact of alternate finance, and how do you keep up with this?
I’m excited to see what the alternative lenders are going to provide in the near and long term future, because I really believe that alternative finance is the right thing for the growth of the British economy and for our businesses. For early-stage companies, alternative financiers can be very effective on the debt and equity side to provide funding.
It’s an area where Britain is lagging behind. In France, we see capital trusts doing a great job of leveraging alternative funding for businesses in their early stages of growth. The issue is that this is a challenging area, where the risk is high and we need more people to back alternative funding in order to reach a critical mass. I understand why alternative financiers might not want to fund that space, it’s risky so it’s hard to make it work.
To learn more about Chand’s rise to success, don’t miss his ‘10 Lessons Learned on the Path to Partner’. If you feel ready to discuss your next career opportunity in Corporate Finance, or you’re looking for talent to fill a role in your organisation, please get in touch.