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Christie's Business Outlook 2017

Within Christie & Co we continue to focus on our company ethos of promoting clients’ interests rst and foremost - we are able to tap into the knowledge and expertise across the Group and share this depth of knowledge for our clients’ bene t. Longevity in our sectors While 2016 was, it’s probably fair to say, a complex series of twists and turns on the economic front, we are seeing more than ever that the sectors that Christie & Co deal in have longevity, and will remain a focus for operators and investors for the foreseeable future. At Christie & Co we don’t simply concentrate on trophy assets such as Capital hotels; many of the business sectors that we work across support the communities in which they operate, ranging from care homes to pubs and convenience stores to nurseries. Operating across the business size spectrum, we deal with businesses across the sectors from the smallest business to the largest corporate - this scope enables us to truly understand the operating levers and market dynamics of the sectors that we are in. Within these sectors customer purchases range from discretionary spends (hotels, Leisure, Restaurants, Pubs), some are high-priority spends (Petrol Filling Stations, Children’s Day nurseries), some are necessity spends (Pharmacy, Care homes, Dental) and some are essential (Convenience Stores). So although there are uncertainties in the wider market, what we can be certain of is that these businesses will continue to thrive as their customer base remains strong, and they adapt to customer requirements and trends. Over the past year the sectors in which Christie & Co operate have faced a myriad of challenges but we have been well positioned through our network of local o ces and wide-ranging expertise to support our clients.


The life cycle of ownership


Over the past few years, we have nearly doubled our service o ering to 78 services across the business – all of which provide assistance to an owner or operator across the life cycle of ownership. Christie Group can assist in making a business work. From our Business Agents helping an individual, a family or a company to buy a business, Christie Finance assisting with obtaining funding, our Consultancy teams advising on decisions concerning management and branding or looking at physical development options and operating e ciencies, Christie Insurance ensuring that the relevant coverage is in place, and Orridge and Venners covering areas of stock, logistics, management compliance and control. And then, when an owner comes to make a disposal, we are on hand to conduct the sales process, assist with marketing and advertising to complete the circle for the owner. The “B” word It would be remiss of me not to mention the “B” word – Brexit – in this overview. While the topic is covered extensively in the pages of the 2017 Business Outlook, I feel that although some uncertainty was felt a er the initial referendum outcome, the likelihood is there will be no lasting impact on Christie & Co’s sectors. All of the business sectors referred to in this document, both in the uK and internationally, are multi-domestic businesses. Although we have seen an increase in sales to overseas buyers, particularly those from Asia, 90% of sales within our markets are to buyers within the same geographic market and, as a result, the Brexit vote will have little impact on domestic transactions. there will, of course, be an economic impact, and there is much discussion as to whether trade will boom or decline, however, Christie & Co will see no change in the way we work or in the transaction process.


Business activity in the second half of 2016 normalised, with both buyers and sellers realising that the Brexit outcome had limited immediate impact. It’s clear that intelligent business owners or prospective buyers are unlikely to put their plans on hold for what could be upwards of three years, and so for them, business life goes on. Looking ahead Many private equity investors can be agnostic regarding the sectors they look to invest in, driven primarily by returns and for those private equity houses based outside the UK, the reduction in the value of pound sterling against major currencies, and the dollar, in particular, has made uK assets more attractively priced. the availability of funding is a driving force within the business cycle; with base rates reduced, margins have tightened, and with borrowing becoming ever-cheaper, we are likely to see more borrowers attracted. however, the challenge remains nding good businesses to buy. Encouragingly, we predict an increase in supply in 2017. In the uK in particular, although our sectors will be impacted by various legislative changes including the national Living Wage and pharmacy funding, these should be well-managed by good operators, leading to a minimal e ect on the industry. We have seen that the pub market has settled now that uncertainty over the implementation of the Pubs Code has dissipated and that momentum has been good in the second half of 2016. this is likely to continue into 2017. Internationally, we may see a potential hiatus as Germany and France go through election periods, but now that a settled government is in place in Spain, it is likely we will see a continuation of demand there, as well as in Scandinavia, Poland and CEE. Although 2016 has been quite a tumultuous year in terms of macro environmental factors, at Christie & Co we are busy assisting our clients through the strength of our business network and experienced teams. We predict a further urry of Corporate Merger & Acquisition activity as the new Year unfolds." target="_blank">

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