Chris Walton of Shawbrook in discussion with Simon Keegan, North West Business Insider Editor.
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00:00Hello, I'm Simon Keegan. I'm the editor of the Northwest Business Insider. And as we
00:15go into 2025, I'm joined for a special business interview with Chris Walton, the head of corporate
00:23leverage at Shawbrook. Hi Chris. Hi Simon, good to meet you. So tell us a little bit about your
00:30role at Shawbrook, Chris. So I head up the corporate leverage team here at Shawbrook,
00:35which is essentially the cash flow lending team that looks after
00:39earnings managed businesses across the UK. We're providing cash flow based leverage finance
00:43products. Yeah, so we're heading into 2025. It's been an interesting couple of years really,
00:50hasn't it, in business and the wider economic climate. So how do you see the market
00:58looking in the new year? Yeah, so we are positive about 2025. It's been a turbulent few
01:04years, as you say. I'd say sort of cautious, optimistic. There are clearly challenges on the
01:09horizon for our clients, for SMEs in particular, with the forthcoming national insurance
01:14increases and minimum wage in particular. But generally, I think when we're talking to
01:18clients and advisors across the market, I think people are feeling upbeat about the opportunities,
01:23challenges to navigate, particularly to see how those cost pressures will be navigated and
01:28whether people are able to pass through those pressures in terms of the prices that
01:33they're charging to their own clients. I think if we look across the business as a whole and
01:38the market in the UK, I think people are feeling that there are definitely opportunities. We are
01:42largely dealing with event-driven financing, so where there's a change of ownership or sort of M&A
01:48that's taking place, I think people still remain positive about this resilience of the UK
01:53economy, despite some of those headwinds overall. Yeah, so you say that you're dealing
01:58with that kind of event-driven, so this is businesses that will come to you and say, look,
02:04we're looking to maybe acquire another business or something of that nature. So where do you
02:10kind of fit into that landscape and what sort of situations will a business come to you,
02:18rather than perhaps a more mainstream lender? Yeah, so I think as we've seen over the last
02:24sort of 5-10 years, the specialist lending businesses like Shawbrooke are really sort of
02:30fulfilling a need as the more traditional high street banks have pulled back from some of those
02:35growth-orientated SMEs, either because they feel they're looking for slightly more vanilla credits
02:41or just the size of the SME market and the size of the deals isn't as attractive to the
02:46traditional lenders that are trying to focus on, I'd say, those more vanilla, slightly larger
02:50transactions. And therefore, the role Shawbrooke provides in the ecosystem is, to my mind,
02:54really critical around helping those growth-orientated SMEs that are perhaps less
02:59straightforward, less vanilla credits, that are looking to particularly around M&A or for the
03:04owner-managed businesses where you've got owners that are perhaps coming towards the end of their
03:08career, have built the business and are looking around change of ownership, exit solutions, and
03:12Shawbrooke can really assist in providing the financing to facilitate, whether it's the
03:16growth strategy or the sort of transition for owner-managers looking to exit. You've changed
03:20some of your sort of divisions and your focuses, so how's that going to help with that?
03:26What's the plan there? Yeah, so my team at Shawbrooke, we recently reorganised to bring
03:31all of the owner-managed cash flow lending businesses together into a single team, and the
03:36view is that bringing that specialisation and focus will allow us to really improve and
03:40increase the service we deliver to our clients. And we found, as the bank and the organisation
03:45has grown and developed, we've seen a lot of success over the last five, six years with our
03:49cash flow proposition, but we had it scattered in a few different teams, and the view is bringing
03:53it all together into a national team will really allow us to get that sort of concentration of
03:58expertise, which we think will allow us to deliver faster and better for our clients.
04:02And so will it, you say faster and better for the clients, do you think it'll be,
04:07you know, what else will it mean for the clients? Will there be new products on offer?
04:11So I think fundamentally the proposition and what we're looking to deliver isn't changing,
04:14you know, what we're really trying to do is the professionalisation and ease of use for
04:19our clients, you know, should be, you know, that bit smoother. Yeah, we know event-driven financing,
04:24you know, M&A, particularly for owner-managed SMEs, it might be the first time they've done a
04:29major financing event, the first time they've done major acquisition, and therefore having a partner
04:33in a specialist lender like Shawbrooke is really important, and therefore our view is having that,
04:37someone who can hold their hands and work with them in partnership to navigate through that process
04:42is what we're trying to bring to bear, and our view is the team in terms of its new focus will
04:46allow us to go from strength to strength. That's the thing, isn't it? Often even if it's a really
04:52experienced business owner, often they'll find themselves buying a business for the first time,
04:58selling a business for the first time, you know, even with all of that experience, they can still
05:03be quite new to some of these processes, can't they? And as you say, if it's slightly, I think
05:10the phrase you used was less vanilla, they need to look at perhaps a more sort of bespoke solution.
05:18Absolutely, and that's kind of what we pride ourselves in bringing, you know, part of the
05:21reason I've been doing this for nearly 20 years, and one of the reasons I love my job is I love
05:24working with businesses, with owners around understanding their sector, and they are the
05:28experts to how they run their business and how they operate within their market. You know, what
05:32we bring is that financing expertise, which particularly for businesses going through, you
05:36know, first major acquisition or first major financing event, you know, they might need a bit
05:41more support and guidance around, you know, that element of it, and that's where I think we really
05:44bring that specialist expertise to help, you know, bring our knowledge around finance and lending
05:50to their expertise around the business, the market they operate within.
05:53So something Shawbrookes has been known for is that kind of personal approach, and it can't be
06:00one size fits all, can it? What you don't want is, you know, that kind of, I always use that phrase
06:07from, it shows the generation of TV I grew up with, computer says no. You don't want that kind
06:13of thing, do you? You want to look at the individual stories and the individual circumstances. Is that
06:19still really important to you going forward, that personal approach?
06:23Absolutely. We, cookie cutter kind of banking is not what we do. It's every business is different,
06:29have its nuances, and we know when we're looking for entrepreneurial, you know, growth-focused
06:33clients that we can support, that, you know, we know there are going to be bumps in the road.
06:37It's not going to be a linear sort of straightforward climb. It's, and that's kind of the
06:41specialism we bring is around understanding that every deal, every client, every business is
06:45different, and therefore finding the right solution that works for them, and having a
06:48partner in Shawbrooke that can go with them on that journey through the ups and, you know,
06:52sometimes the downs that will happen when, you know, businesses are trying to navigate into
06:56new markets or into, you know, sort of new territories, new products.
06:59I suppose that's the key as well. You don't just want it to be a one-off lend, do you?
07:03You want to be with them, as you say, on that journey, don't you?
07:06Absolutely. It is about having that close relationship with the business and working
07:10with them as they, both the initial financing event, but really, you know, where we find,
07:15you know, our proposition resonates most firmly with clients is where they are looking to,
07:20it's not just, you know, the immediate deal, the immediate financing. It's about
07:23the journey they want to go on, the growth aspirations they have for their business,
07:26and having a lending partner that can grow with them, can provide, you know,
07:29follow-on financing or is there for, you know, the next event, you know, what might be one,
07:34two, three, four years down the line. And that's where we particularly find some of
07:38our more traditional competitors often struggle, even if they like a deal on day one. It's having
07:42the, you know, the confidence to be able to follow and back the management team on the next deal,
07:46on the next opportunity, and having a partner, you know, that the management team knows is going
07:50to be there with them on that journey. So, do you find that you've got these
07:53kind of businesses that you've worked with for the long haul, you know?
07:57Yeah, absolutely. As I say, we've been, you know, we stood up the cash for lending proposition,
08:02sort of, 2019 across Shorbrooke, so just before, just before COVID, which was interesting timing
08:07with hindsight. And we've seen, you know, a lot of, you know, businesses that started with the bank
08:11back in 2019 that have grown with us and, you know, we've grown on that journey with them.
08:15And that's a real, you know, joy to see, you know, some of those businesses on that trajectory and,
08:19you know, new clients that we brought on board, you know, more recently that we have, you know,
08:23very excited to work with them as they progress through their own trajectory.
08:27Yeah, so talking of their growth trajectory, what about your growth trajectory? You know,
08:33what is the future for Shorbrooke and where do you see your business growing to?
08:39How high can we go, I suppose? So, you know, we have big growth ambitions now. We've seen a lot
08:43of success over the last, sort of, five years in terms of the various cash flows, the propositions.
08:48Our view is that by bringing the business together into this new dedicated team,
08:52you know, we will, you know, accelerate and see further growth. So, you know, we're very focused
08:55on, you know, across the key regional hubs that we support and driving our business forward as we,
09:00you know, we grow with our existing clients and look to bring new clients on board as well.
09:04Fantastic. Well, Chris, thanks very much for joining us. And as with any of our videos,
09:11if people want to know more, check out insidermedia.com and you'll see all of the latest
09:17news from Shorbrooke, I'm sure. And thanks for joining us.