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  • Equity stakes and the pandemic: how has business responded to Covid-19?

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Mark Borzomato reflects on the ways in which the MSIF equity portfolio companies have responded to the pandemic, and the qualities they will need to thrive in the uncertain times ahead.

The recent spate of local lockdowns has made it clear that businesses cannot expect a straightforward return to pre-pandemic normality in the near future. In March, we perhaps expected a short lived period of disruption followed by a swift return to ‘business as usual’, however we now know that the impact of coronavirus will be felt for some time to come, and its effects on the economy continue to be difficult to predict.

“The key quality which will enable businesses to thrive in these circumstances are flexibility to adapt to change, coupled with sound financial management to create resilience.”

Companies in the MSIF equity portfolio have demonstrated that quality to a hugely impressive extent in recent months, adapting in different ways to the impact of coronavirus on the sectors in which they operate.

Businesses helping fight against Covid 19
In some instances, adapting to the impacts of Coronavirus has meant reacting quickly to an increase in demand for a specific product or services. For example, Wirral-based Biofortuna was one of the few companies in the country with the capability to gear up at short notice to supply critical components for the first CE marked coronavirus testing kits, whilst Health and Safety consultancy EDP, have been providing advice to clients ranging from SMEs to blue chip companies on how to make their workplaces Covid secure.

Adapting to the ‘new normal’
For other companies, working practices have had to be adapted rapidly to the new circumstances.

Liverpool based Centriforce, who manufacture damage protection products from recycled plastic, had to create Covid safe ways to operate their factory continuously even at the height of the first wave of the pandemic as they are a supplier to critical sectors including utilities and agriculture.

For Cybertill, who supply software to retail businesses, the requirement has been very different as they have moved to a completely remote operating model with all staff working from home.

The experience of medical weight loss specialists Bodyline Clinic perhaps illustrates most fully the complex mix of challenges and opportunities which have arisen. Demand for their services has never been higher, due to the well-publicised challenges many people have faced managing their weight during lockdown, coupled with the links between obesity and higher risk from coronavirus. However, their existing business model, operating face to face consultations from clinics in the North West and North Wales, could not operate during the first phase of lockdown. As a result, they developed a CQC approved remote prescribing service so that they could continue to support their existing patients. While the clinics are now open again, with new Covid-secure protocols in place, Bodyline is also now launching a fully remote service for new patients which will give local customers the choice of a physical or virtual consultation, as well as making the business accessible to customers from further afield.

The importance of resilience
While these businesses operate across a range of sectors and the challenges and opportunities created for them by coronavirus have all been different, what they have in common is entrepreneurial and resilient management teams who have adapted to change.

The management team
The quality of the management team is the critical element in any equity investment that we make. Business plans and forecasts are very important, but ultimately we know that circumstances will change, and the ability of the team to respond will be key. The way that our equity portfolio has reacted to the enormous changes of the last few months has been hugely impressive, and gives me confidence that they will continue to navigate their way through the unpredictable times ahead.

And in addition to these existing investee businesses, we continue to actively look for new opportunities to join our portfolio. Despite the current uncertain times, we remain keen to speak to quality management teams in SME businesses looking for funding to enable their continued business growth, with our equity funding typically providing investments of between £500k - £2m. If that sounds like it might be your business, we look forward to hearing from you.

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