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Human Capital Market Review Q1 2020

21 April 2020

Gambit Corporate Finance announces the publication of its Human Capital Market Review for Q1 2020.

To read the full report, click here.

Q1 2020 Summary:

  • Corporates are faced with an array of government support measures which require careful navigation in order to ensure that the benefits can be both accessed and maxmised.
  • Government backed funding schemes offer a chance to both bridge short term liquidity gaps and allow access to contingency funds, which can be deployed on unprecedented terms at a low cost of capital due to government subsidies on the interest and, additionally, potential capital repayment holidays.
  • The job retention scheme (now extended to 30 June 2020) is proving to be a highly utilised relief measure, softening the blow to the jobs market.
  • The postponement of IR35 prior to the UK’s lockdown provided those with a low level of preparedness with much needed time with which they must now act prior to the new April 2021 deadline.
  • As management priorities have shifted significantly, corporates in the sector should focus on liquidity and balance sheet strength over short-term profitability, with the management of working capital of paramount importance in the short to medium term, shoring up capital structures, preserving value and providing an ability to be opportunistic to acquire targets or invest in high caliber consultants.
  • Effective strategic planning is of critical importance and concise and well thought out COVID-19 plans should highlight the key strategic, financial and commercial actions being taken by management.
  • Despite significant near-term uncertainty, corporates should consider the potential of the economic rebound, giving due regard to the historic performance of the Human Capital sector at the turn of the market.
  • Despite a promising start to Q120, M&A activity dropped significantly in the second half of the quarter, leading to a 13.7% reduction in deal volumes.
  • Although businesses are reducing their permanent hiring activity in the short term, a significant degree of pent up demand will buoy the sector upon the eventual rebound, with those that have prepared effectively set to capitalise.