A busy market for deals in East Anglia

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PEM Corporate Finance report transaction activity is holding up well and the team is busy. Barring any major geopolitical shocks, PEMCF can see this trend continuing through Q4 into 2018.

Activity levels

According to Experian’s Corpfin Deals, values in the East of England are up 6% year-on-year.  As ever this is driven by some very large deals such as the acquisition of Booker by Tesco, and a couple of Premier Inn transactions.  Tesco is in Welwyn Garden City and Premier Inn in Luton which is why they both sneak into our regions statistics. The East of England also contributed to 8.2% by number and 9.5% by value to the overall UK M&A market.

Deal prices

From our own research, as published in our regular Valuation Snapshot, we see that prices paid for unquoted companies show a largely uninterrupted pattern of price growth – in term of multiples of EBITDA paid for these businesses – since June 2013.   And the longer term trend has been broadly upwards since early 2009 - good news if you’re selling!  It’s also good news for buyers as the business being sold are generally more robust and performing much better than in 2009.

Lower to mid-market activity is strong

Perhaps a better clue to the strong activity levels at the lower and mid-market end of the spectrum is the busy year we’ve had at PEM Corporate Finance. We’ve seen the completion of a range of company sales, acquisitions, and buyouts. These included the sale of two near neighbouring companies based in Newmarket - Nitritex to Australian quoted company Ansell plc, and Molecular Dimensions to US private equity fund Stone Calibre.  Completing a trio of sales to overseas strategic buyers we advised on the sale of Pope Woodhead to US quoted Huron. On the buy-side, we advised Cambridgeshire-based Monkfield Nutrition on the purchase of the reptile division of Arcadia Products plc, and gave S593 valuation opinions in respect of the acquisitions of US targets Perk Inc and RadiumOne by AIM quoted RhythmOne plc. Buyout activity is also strong - we advised on the MBO at Cambridge Publishers and have a number of MBOs in the pipeline.

What’s driving the market?

All of our recent sales have been to overseas strategic buyers which find the UK attractive following the devaluation of Sterling. Private equity funds also have strong appetite to do deals, driven in large part by a large overhang of un-invested cash.  Venture capital trusts in particular are having to reinvest themselves to back growth businesses since former chancellor George Osborne’s change to the VCT rules.

 

This article as originally published in Business in East Anglia in October 2017.

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Lake Falconer

Corporate Finance Partner
Lake leads the PEM Corporate Finance team on MBO, acquisition, disposal, succession and strategic planning. He also heads up PEM’s valuation team providing business valuations for shareholder exits, disputes, business planning and regulation. Lake has over 30 years' senior level experience as a business adviser and as a manager in industry. He holds the ICAEW corporate finance qualification.