Annual Review / Preview Event 2025 event summary

On 8 January 2025, TMA UK welcomed over 120 restructuring and turnaround professionals to the Annual Review / Preview Event kindly hosted by Evelyn Partners.

The theme of the evening centered on the role of government and its associated institutions in restructuring and turnaround work, together with the general economic outlook for 2025.

Expertly compered by TMA UK Director Andrew Pepper (special situations partner, Evelyn Partners), the panel comprised:

Matthew Atkinson – Independent advisor and Interim CFO of the University of Middlesex

Mark Brockway – Corporate Finance Partner, Evelyn Partners

Lindsay Hingston – Restructuring Partner, Freshfields

Jonathan Ingram – Executive Director, Special Situations Team, UK Government Investments

Whether dealing with HMRC, Local Councils, Planners, Quangos, Government Departments, Educational establishments or even maybe nationalised industries, the session strived to inform and educate on the role of government: where it may be encountered in its many forms; and insights from those on the frontline,

A new approach with a new government?

The session opened with reference to the Financial Times' recent survey of 100 economists for their outlook for the year ahead, which linked government and consumer spending to the economy.

Jonathan explained the interesting first few months to the new government which has a key mission of growth at its heart. The October budget provided for the establishment of a national wealth fund for British energy and has given the British Business Bank a mandate to deploy funds to drive growth. The expectation is that funds will shortly start to be deployed.

The areas where Mark sees impinging on government is where regulation has increased, and clients are wanting to acquire expertise – for example, buying-in consultancies, where this is driving M&A activity. From Lindsay's perspective, where government impinges on restructuring work, the work is by definition high profile with significant scrutiny (including from select committees) if the downside risk crystallises. She explained the tension which can exist between the duties and obligations of a board in those circumstances, which can differ from the duties of the regulator.

In those situations where government has a role, and a distressed business may perceive itself as strategic, Jonathan explained that getting money out of the government is – rightly – difficult. UKGI purposefully takes things seriously in dealing with taxpayer’s money. It is deployed, but it depends on the individual importance and how compelling a case – for example, impacting on public services, or a large number of jobs at risk with a particular geographic concentration. UKGI must also be conscious of precedent-setting. And it is not necessarily a straight-forward process for the Government to deploy money – there is a question over the form which any funding takes; there are regulations around giving out money; and ultimately the civil servants need to give good advice to the minster.

Challenges facing the Higher Education sector

Matt explained that the £45 billion Higher Education sector is facing significant financial difficulty and is not used to dealing with the kind of stakeholders it now has to deal with. The solution for the sector will come partly from government, and partly internally from operational restructuring. The main challenge for the sector has been the lack of inflationary increases in fees. Matt thinks this will be resolved, but it will also mean significant borrowing to pay to be at university.

There is £15 billion of debt in the Higher Education sector that needs to be dealt with, £5 - £7 billion of which is in private placement bonds held by (for example) pension funds. There is a wall of refinancing to come, but there is typically no security and no insolvency regime for universities, so options upon default are limited. The remainder of the debt tends to be held by the UK clearing banks, who are themselves invested in UK plc. So experienced restructuring professionals can add huge value to the Higher Education in bringing their expertise with dealing with things as familiar as accurate financial forecasting, and stakeholder management.

Matt also predicts that there will be M&A in the sector, but there are challenges in the variety of ways in which universities are established: for example, by royal charter which requires going to the Privy Council, or even established by the Pope.

Then, Matt says, there are the operational matters – the availability of university courses are generally driven by the availability of expertise in the academic staff, rather than student demand; so there are too many courses with too few students taking them. But there are operational efficiencies which can be found by universities sharing courses or sharing facilities in order to drive efficiencies. And in some cases, there may be a question for government support – for example, the availability of a particular type of course in a particular geographic location. And, Jonathan explained, that's where it comes back to the question of precedent-setting; there is a balancing act.

Challenged sectors and the general economy

Andrew pointed the panel to the figures coming out from Christmas: that retailers were faced with trade not being as strong as expected over Christmas, coupled with increases in national insurance, meant that the sector was going to be hit hard.

Mark's view of the future was rosier, with pent-up demand for transactions. The high-interest rate environment coupled with uncertainty (politically and geopolitically) had meant, for example, that hold periods for private equity funds had been stretched. But there is about £1.5 trillion of uninvested capital waiting to be deployed.

Lindsay explained that the water sector in general has challenges: this has been recognised by Government, which has ordered root and branch review. But it is too late for Thames Water. Lindsay's view is that the current regulation of the water sector is not set up for an era where a once-in-a-lifetime refresh of the infrastructure is needed, and that is the source of its problem.

She agreed with Mark on the pent-up demand in the market. And she also predicted another wave in retail restructurings, together with those businesses who had been successful during covid, but where the demand has now come off. However, she suggested that the UK had been remarkably resilient especially when compared with Germany.

Jonathan suggested that supply chain risk is high on UKGI's radar, which is not sector specific, and is most likely to hit the SME market. He explained its importance to government – for example, the recent nationalisation of a small manufacturing business that was critical to defence.

Matt predicted that a university will fail in the first 12 months, and what UKGI does – and the precedent it sets – will be closely watched by other university CFOs.

The year ahead

The panel agreed that 2025 was likely to be another year of consistent activity for restructuring professionals: perhaps not an avalanche of restructurings and insolvencies, but a market where those with a restructuring skill-set would have plenty to offer. The new government will not be shy about intervening where appropriate, and there are likely to be opportunities for investors.

All in all, it will be another interesting year ahead.

Thank you to our panellists for sharing their excellent insights on an interest year for business, as well as their predictions for the year to come. We hope you'll join us for more TMA events in 2025. Please visit the TMA UK website events page to see what's coming up.