Our Insights offer a closer look into a variety of industries, markets and M&A services. Written by our experienced leadership team, the content is set against a backdrop of influential factors including political shifts, economic uncertainty and COVID-19, all within the context of M&A deal activity. We are continuously adding new insights and updating our existing ones.
Key insights into Private Equity Sale & Investment including the rise of the elevator deal, what private equity is and whether you should considering selling your business to them.
Private Equity’s investment of private capital into businesses, whether on a full or partial buy-out basis, has enjoyed exceptional success and there is now more than £2.3 trillion of funds in Europe alone looking to either invest in, or purchase outright, emerging, mid-market businesses. A key to the success is Private Equity’s high yield when other asset classes have floundered – but how have they achieved this?
Explore our Growth Capital Transactions service HERE.
Key insights into the Food & Beverage Manufacture sector, including the current market conditions, projections, valuations, market opportunities and recent strategic deals.
A large number of trade buyers will be acquisitive, as many have performed well during the pandemic, especially in the supermarket supply chain. Some food-to-go manufacturing has suffered, but overall the sector has grown. Potential sellers will be monitoring the UK Capital Gains Tax regime. With 10% levied on the first £1 million and 20% thereafter to £10 million, it looks relatively benign, yet tax receipts need to increase to support Government spending and it is expected that CGT rates will rise. Many sellers are therefore hoping to get deals agreed and closed prior to any changes.
In addition to trade deals there is circa £2.3 trillion of private equity funding looking for strong yields. Food and drink manufacturers with good margins are both defendable and scalable.
Key insights into the Employee Ownership including why sell to an EOT, what the sale approach is, how a company is valued and how the sale is funded.
An increasing number of owners are now assessing the benefits of selling their businesses to their employees via trusts versus an open-market business sale. This process can be vendor-led, does not require the employees to drive it and valuations are a commercial discussion with no requirement for the involvement of a 3rd party. Due diligence is light, and the transactions can be funded against an agreed schedule, thereby enabling sellers to both reward and handover over time. There is also the 100% tax-free aspect which is highly attractive.
Explore our Employee Ownership Sales service HERE.
M&A Review 2020 focuses on the comparison of the last two years in the terms of the number of deals, capital invested and capital breakdown, together with the rise of the elevator deals and a closer look at forecasts and valuations for 2021.
Overall, in the UK, deal volumes are down by a third but this relates to announced sales and it is harder to determine volumes in the investment market. Q3 is up by almost 200% on Q2 which suggests that many deals just lagged rather than fell.
Certainly, this is our experience, particularly as investors and buyers analyse the new normal and take a view on post-lockdown models. Sellers simply won’t accept big reductions therefore remodelling the numbers works for both sides. Despite the overall decline, volumes are higher than during the 2009 deal black hole.
Key insights into the UK Managed IT Service Providers sector, including the current market conditions, projections, valuations and existing latent market opportunities.
With a blend of market factors, M&A has remained remarkably resilient in the sector and bank funding has remained supportive. As expected, Q2/Q3 FY20 market activity has been lower as MSPs focused on customer projects with the backdrop of Covid-19.
As trading variability becomes much clearer in Q4 FY20, especially in relation to small and mid-market MSP businesses, we predict that M&A activity in the sector will see a marked upturn. We are also seeing that most buyers are happy to use Covid-19 lockdown ‘excepted’ valuation models.
Key insights into the Utilities, Infrastructure Services & Consulting sectors, including recent deal activity, the possible impact of the ‘Build’ deal and what the future looks like for M&A investment strategies worldwide.
Whilst the government has the challenge of concluding the on-going investment into a range of critical sectors, as highlighted below, it is clear that they will continue to focus on key national and regional infrastructure projects that are required to drive economic growth and unlock private investment.
Not only have we seen increased investment from both the public and private sectors who are focusing on long-term returns, but we are also seeing a strong strategic move by large corporates to make SME acquisitions in the infrastructure and utilities sector. So, with increased M&A activity, could this be the time to consider selling your business or seeking investment for business growth?