pro-manchester Corporate Finance Review 2019

Thursday, 13th February 2020

Foreword by pro-manchester Chair, Jenn Hazlehurst, Partner – EY

Despite the UK General Election and the Brexit impasse leading to a slower second half of the year, 2019 was another strong year for transaction volumes and corporate finance teams generally across the North West. Data shows that whilst there was only a slight decline in deal volumes, the average deal value dropped considerably by around 50%, continuing the general trend from 2018

Much of this was driven by economic and political uncertainty forcing organisations to rethink and adjust their M&A strategy, and leaving shareholders to wait for business performance metrics to recover, before launching any M&A sales processes.

As in previous years, the amount of liquidity available from national and international banks and debt funds remained high, leaving private equity firms with significant levels of dry powder for investment. This was positive for both entrepreneurs and corporates alike looking for growth and investment, and generated competition for quality assets – maintaining the seller’s market status

The majority of trade deals in 2019 were driven through strategic acquisitions to acquire product portfolios and to enter new geographies as companies looked to ‘buy’ instead of ‘build’. Key examples included GB Group’s acquisition of IDology and the acquisition of ATG Access by Hill and Smith. Private equity deals were still strong either as primary or secondary exits for management teams looking to de-risk and gain access to development capital as in the sale of holiday home provider, Sykes Cottages, by Livingbridge to Vitruvian Partners and Ardenton’s acquisition of Food Innovations Baking Group.

By contrast, the UK IPO market had a difficult year. In October EY IPO Eye found the third quarter of 2019 to be the quietest quarter for IPO activity for a decade. The uplift in momentum in the second quarter looks to have come at the expense of the third as issuers brought their plans forward to take advantage of the IPO window created by the extension to the Brexit deadline. Equally, it is likely that companies, who were originally targeting the second half of 2019 for an IPO, may have postponed in favour of a more settled outlook in 2020.

Looking ahead to 2020, the outlook is generally more optimistic with teams across Manchester’s corporate finance community citing January 2020 to have been one of the busiest starts to any year. I anticipate that 2020 will see a number of deals coming to market; many of which will have been held back over the past six to twelve months.

While many consider believe that the cautious approach will continue, appetite remains from the local and international markets for good-quality businesses and the North West will continue to be a focus for UK M&A activity.

Download the full  Corporate Finance Annual Review 2019