War for talent could fuel takeover boom, predicts Johnston Carmichael - as it outlines its forecasts for 2022

The financial services sector could see a war for talent next year fuelling takeovers aimed at gaining access to a rival’s workforce, according to an industry expert.

Ewen Fleming, head of financial services at Aberdeen-headquartered accountancy heavyweight Johnston Carmichael, said trends in the sector including spiralling salaries, could intensify competition for key roles and lead to businesses looking to do deals quickly to acquire additional staff and not just customers and capabilities.

After several mergers and acquisitions were inked in the sector during 2021, Mr Fleming also expects the need for consolidation to drive further activity next year.

The wealth-management sector in particular has seen significant activity in 2021 with high-profile transactions in Scotland including Mattioli Woods acquiring Edinburgh-based Caledonia Asset Management, and Waverton Investment Management buying wealth-planner Cornerstone Asset Management of Glasgow and Edinburgh.

Johnston Carmichael’s chief executive Andrew Walker said businesses need to plan and react decisively. Picture: Nick Mailer.

Mr Fleming also believes there will be a growing level of scrutiny from regulators on the financial services sector’s increasing reliance on outsourcing, and the systemic risks this poses. He pointed out that most cloud services providers are owned by big technology firms that sit outside the current regulatory regime.

Other 2022 predictions made by the practice’s sector experts include a growing focus on environmental issues in the food and drink sector in the wake of COP26.

“Sending just one kilogram of food waste to landfill produces the same carbon emissions as landfilling 25,000 500-millilitre plastic bottles – food waste is a bigger contributor to climate change than plastic waste,” pointed out Adam Hardie, head of food and drink at the firm.

Sustainability issues are also likely to see a “wall of capital” deployed into technological solutions to help on the path to net zero.

“Increasingly, we are seeing entrepreneurs shape their proposition to one that will support a move to net zero. We expect this will continue to pick up pace and that green energy, carbon capture, food production/mileage and the wider circular economies will accelerate quickly in 2022,” said Shaun Millican, Johnston Carmichael’s head of technology and life sciences.

Energy head Mark Stewart believes a carbon tax is likely to be introduced to penalise those who don’t get on board with the huge shifts required to tackle climate change. He said such a move would represent a “less carrot, more stick” approach to help achieve the systemic change required.

Sustainable

Mr Stewart also said businesses will need to prepare for enhanced climate and [environmental, social, and governance] reporting. “Look for the growing trend in appointing chief sustainability officers to drive this at board level,” he said.

Looking at the broader picture, Johnston Carmichael’s chief executive Andrew Walker said businesses need to plan and react decisively.

“After getting back onto a stronger footing this year following the success of the vaccination programme, businesses face further challenges and uncertainty as governments consider how to slow the Omicron variant. Hopefully disruption will be short lived, and I am encouraged by the remarkable resilience shown by our SMEs throughout the pandemic thus far,” he said.

“Change will present growth opportunities such as those generated by the energy transition and wider move to net zero following COP26. Increased adoption of technology is introducing ever-greater efficiencies, helping businesses to be more efficient with better data, providing real-time information and freeing up people to concentrate on what they do best.”

A message from the Editor:Thank you for reading this article. We’re more reliant on your support than ever as the shift in consumer habits brought about by coronavirus impacts our advertisers. If you haven’t already, please consider supporting our trusted, fact-checked journalism by taking out a digital subscription: www.scotsman.com/subscriptions