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SCOTLAND M&A REVIEW
SCOTLAND – VITAL STATISTICS
enable the company to combine services private equity companies to gain the returns
for domestic and international markets. they need from their highly leveraged oil and
EMPLOYEE JOBS BY INDUSTRY Domiciled in Aberdeen, Qserv was gas investments, the nascent Scottish
AGRICULTURE, FORESTRY & FISHING 35,500 established in 2001 and has some 400 renewable energy sector is thriving.
MINING/QUARRYING INDUSTRIES 25,200
employees, 250 of which work offshore. For
ELECTRICITY/GAS/WATER SUPPLY (UTIL) 16,100
the most part, its activities are focused on NEW ENERGY
MANUFACTURING 216,000
North Sea operations, but it also operates in Figures from the Scottish government
CONSTRUCTION 137,700
West Africa, the Middle East and South-East indicate that Scotland is on course to hit
RETAIL & WHOLESALE 352,700
Asia. Its reported turnover in 2007 was some its green energy targets of 50 per cent of
HOTELS & CATERING 169,300
NOK500 million. electricity generated from renewables by
TRANSPORT, STORAGE AND COMM 129,400
FINANCIAL SERVICES 90,700
2020, with an interim target of 31 per
REAL ESTATE & BUSINESS SERVICES 363,200
DEAL PIPELINE cent by 2011.
PUBLIC ADMINISTRATION 155,400
The outlook for M&A activity may be Rob Cormie, head of corporate finance at
EDUCATION 185,100 difficult to call, but the numbers point to Edinburgh investment bank Quayle Munro,
HEALTH & SOCIAL WORK 387,500 fewer deals with smaller price tags coming is doubtful: “The targets being set by
OTHER SERVICES 123,700
TOTAL EMPLOYEE JOBS, (Mar 2008) 2,387,500
“Banks have more opportunities than capital, so your project has
Source: Quarterly Employee Jobs Series,
ONS/Scottish government, September 2008 to be one of the best, otherwise it won’t get done because they
series, published January 2009
are making a choice based on sector and relationships” Rob Cormie
Gregory notes that a prolonged drop in
the oil price often causes larger companies to the table. Gregory suggests other patterns Scotland are extraordinarily challenging. I
to review and dispose of non-core assets, are emerging: “It’s beginning to pick up think there will have to be considerable
adding, “but this time, the problem isn’t slowly, but deals are taking longer to close as changes in how renewable energy projects are
simply about the oil price, it’s about liquidity. clients seek greater detail. We expect to see a procured and brought to fruition for it to
The supply shortage will drive oil price, but gradual increase in deal activity towards happen, especially around the planning
predicting an overall upturn in the market the end of the year. system or grid access as it can take forever.”
is more difficult.” “The market for commercial due diligence Cormie has been appointed to raise
In the corporate drive to identify strategic has previously been perceived as not strictly between £60 million and £70 million for the
fits, improve efficiencies and capitalise on necessary, but an added comfort. Now it’s a construction of Carraig Gheal Wind Farm in
depressed prices, deals continued to be fundamental requirement,” she adds. Argyll on the west coast of Scotland. On
written within the sector. One such oil The slowdown has seen the Aberdeen- sourcing funding Cormie comments: “Raising
and gas transaction took place in July when based due diligence provider working on finance has been fine and it will be done this
Norwegian engineering group pounced on more strategic projects for private equity summer. We’ve had to go back to basics with
Scotland-based Qserv, an independent firms and banks to meet evolving client a really well structured deal.”
provider of well, process and pipeline requirements in the liquidity squeeze. “Banks have more opportunities than
services to the North Sea and international Gregory says the company’s has diversified capital available to lend, so your project has
markets, for an initial payment of NOK1 to offer consultancy services for private to be one of the best, otherwise it won’t get
billion (£100 million) with a deferred equity-backed growth businesses that have done because they are making a choice based
element expected in 2011. previously been highly leveraged and are around sector and relationships.”
“This acquisition enhances our portfolio of finding it difficult to meet the expectations of The onshore wind farm project is owned
services to our existing UK Continental Shelf investors. “Businesses may appear to be by Statkraft, a European renewable energy
clients,” says Mads Anderson, executive vice struggling, but they are just aren’t meeting group based in Norway, and GreenPower, an
president of Aker Solutions. The deal will the expectations of investors,” she remarks. independent Scottish developer of wind and
bring a range of products under one roof and In stark contrast to the challenges faced by hydro projects based in Alloa with a portfolio
36 Mergers & Acquisitions
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