Extraordinary times: a catalyst for change

The COVID-19 pandemic was unforeseen, unexpected and unwanted, but has been the catalyst for businesses, people and economies to adapt to survive, which says much about the resolve of the region’s business community, believes Graham Spalding, partner in Lodders’ Corporate and Commercial practice. 

Changing habits is hard. Just ask any smoker or luddite. 

Thinking about or having the resolve to implement change, often requires a shove from a catalyst – a thing or event which encourages or requires a shift, say a cough or spinning jenny.. 

No one foresaw this pandemic (Bill Gates, perhaps, excepted). No one wanted it. No one welcomed it. Its effects and after-effects have been awful. But as possible catalysts for change go, it is a big one. 

We have seen businesses, people and even economies having to change to survive. In the business world, this is often seen as ADAPT – or perhaps more accurately COPE – and PIVOT, by working out ways to embark on a change of direction to survive, succeed and even thrive. 

Whilst these extraordinary times have come uninvited, what causes might we find for optimism and how might businesses embrace the opportunities the pandemic has brought? 

Causes for optimism

Firstly, save for some poor and well publicised sectors, this lockdown is different. Back in March, businesses and individuals had no idea how to operate or what to expect in a pandemic; no-one had really prepared for one. 

This second lockdown feels different. Businesses have systems in place so they can keep operating effectively – home working; traffic flows; sanitisers, distanced working environments, etc. And people are pressing on with plans for transactional change – that is, buying and selling – because they understand that although the road might be bumpy, we will get through this pandemic. 

Secondly, whilst GDP is down, it has been recovering since April, and recently was only 4% down on its pre-COVID levels, and hearteningly up 15.5% in the quarter July to September. As the Bank of England’s Andy Haldane says, now is not the time for pessimism about the UK’s recovery. 

Thirdly, we have reasons for cautious optimism with apparent success in finding vaccines and medicines to fight COVID-19. 

Fourthly, change drives opportunity. There will be winners and losers. Just ask Betamax. Times of economic downturn and uncertainty bring opportunity to those that adapt best to change – and pivot. 

Prepare to succeed

What can businesses and their owners usefully do? This depends on many factors including financial strength, industry sector, appetite for growth, and personal plans for the future. But here are some things a number of Lodders’ clients have been doing: 

1. If you have weathered the storm better than others in your sector, and have strong financials, no doubt there will be opportunities for growth. Like stock market investing, businesses can grow more coming out of periods of economic distress than in boom times. For some, now could be the perfect time to buy up that competitor, supplier or distributor, and grow. 
2. If Lockdown has made you realise you’ve had enough of the daily grind, and you really do want to do something completely different, now could arguably be the time to sell the business. Since March, we have seen several clients selling up, not in fact because it is a frothy time to sell in their sector, but more because they have reached decisions about selling that they had been putting off for years. 
3. If you are now at an enforced quieter time, now could well be the time to think about putting in place an employee incentive plan, whilst modest valuations can be achieved with HMRC. Should you seriously be looking to quit the business, now could be the perfect time to set-out arrangements between you and co-shareholders with a revised or new shareholders agreement. Dare I say, now is also the time to put in place or update your will, particularly if your business ownership or commitments are set to change.
4. The pandemic also shines a light on the importance of future and succession planning, so consider setting up family trusts or a family investment company to benefit your family in the future.

Find out more 

Lodders’ Corporate & Commercial team supports a wide range of owner managers on their growth journey, raising finance and buying companies, and when they come to sell. Its clients operate across a range of sectors including industrials, manufacturing, FM and care homes, and the team acts for owner managers and SMEs on Corporate M&A transactions, such as sales, acquisitions, buyouts and fund raisings, typically in the £1m to £20m range, and our award winning Private Client team helps individuals on family wealth preservation through wills and estate planning. 

The team is consistently recognised and praised by the legal professions’ independent guides to the best lawyers and law firms, including the Legal 500. 

This article first appeared in Midlands Business Insider.