Patrick Wilkins, a regional director at Venture Structured Finance, discusses what the new political environment means for dealmakers

The emergency Budget will soon be upon us. What would you like to see done for businesses?
 
In their electoral manifesto, the Conservative Party said they wouldn't increase NI contributions. It'll be interesting to see if they stick to that pledge as it will have a big effect on the business community.
 
There is talk of calling time on HMRC's Time to Pay scheme and that may lead to a number of companies going under.
 
The tax amnesty is coming to an end and my personal view is that it has been abused [by businesses]. It has deferred something like £5 billion worth of payments which are all outstanding – it's the cheapest form of borrowing at the moment and I don't think HMRC quite saw that almost everybody was going to take advantage of it. Once the amnesty comes to an end, there will be pressure on businesses to replace that and they will have to go financiers like ourselves to help them.
 
Will bringing capital gains tax into line with income tax stimulate M&A activity?

The hope is that it may lead to a surge in deals like there was back in 2007 when taper relief was axed. It could kick start the M&A transactional market as business owners may have sat on their assets for the past 18 months and this may force them to act.
 
What with inflation, the collapse of the euro and volatility in the capital markets, a degree of uncertainty persists among businesses. What can the new government do to improve confidence?
 
Everybody wanted a strong government but we’ve not got it; however, if we have a strong coalition that can be just as good. This government should be helping businesses and, in the process, growing the economy. From a personal point of view, based as I am in the City, 75 per cent of all the deals I worked on historically were transactional and 25 per cent were refinancings. That's reversed over the past two years.

We need to kick start the market.

Do you believe deals will pick up in 2010?

Greater business confidence and improved levels of sensibly priced debt finance are essential ingredients for higher M&A activity. Transactional volumes will return in due course and I always thought that the market would improve in the third and fourth quarters. I've seen nothing to change that view, but the emergency budget is going to be vital if that upturn in deals is to happen. Of course, the liquidity for such activity in the UK’s mid-market has already been
stretched to the limit by the recession and will require a great deal of  support from both financiers and equity providers.