Navigating the road ahead: a lender’s view

By Owen Malton of DSW Debt Advisory

I left Clydesdale Yorkshire Bank – now known as Virgin Money – a month or so ago and am delighted to have joined Dow Schofield Watts (which has an enviable reputation) working in the Debt Advisory team alongside Phil Tarimo.

I enjoyed my time at the bank, and we achieved some great things but that is in the past. What I can do now is to give back to businesses with my in-depth experience of raising and structuring debt, and help them navigate their way through the next six to twelve months in what we know is going to be a challenging environment. Yes, I have some grey hairs which are beginning to show – hardly surprising with over 30 years of being a lender in the North West!

Owen Malton, debt lender


What we are all only too aware of is how much bad news there is out there. Not long-ago optimism abounded as the handcuffs of Covid were released, however, this has now been overtaken by the geopolitical situation of Russia and Ukraine as well as heightened tensions with China.

Throw in supply issues, inflationary pressures, increased borrowing costs, higher taxes, climate change, industrial action and political change with the appointment of Liz Truss as the new Prime Minister and it’s not great. But we should remember that we are resilient by nature and in adversity, there is always opportunity. We have been through periods like this before and we will get through them again – it’s just a question of how and when.

Of course, during Covid, there was a large amount of fundraising by private equity and private debt institutions and they are looking to deploy these funds into resilient, strong businesses. This is good news and those businesses which can demonstrate their resiliency with strong, contracted revenue streams, profitability margins and cashflows will continue to be attractive.

That said, not all businesses can do this. Therefore, for them, utilisation of this capital might not necessarily be as easy as it was in the past, especially as in an unstable trading period unpredictability makes us all far more cautious. How long this will continue is hard to predict, but we do know that the business environment is dynamic and there will be opportunities during this period and beyond – therefore it will not all be doom and gloom.

So what does all this mean?  Well, we will continue to see market activity, but deals might take longer, especially fundraising, and some businesses will be forced to change their plans, whilst still making sure they are positioned to attract new capital when the time is right. Smart operators will be working with their advisors now, so they are ready to push the button and maximise capital and returns at the right time.

For those businesses where a refinance is on the horizon, this needs to be done with priority and capital structures need to be looked at critically to ensure they have sufficient headroom with the ability to trade through this period of uncertainty.

So yes – deals will continue for some but for others, the path ahead will be a little different. Businesses need to choose the right partners – professional, financial or otherwise – whilst ensuring absolute engagement and communication with all their stakeholders as we navigate our way together through this trading period.

 Owen Malton is a Partner of the DSW Debt advisory team having previously been Head of Acquisition Finance – North for Clydesdale & Yorkshire Bank, now trading as Virgin Money.