30 corporate finance What’s the state of the market?


After two years in the doldrums, it was heartening to see the UK Buyout market rebounding strongly last year, writes Tim Wallbank, corporate finance partner


The overall value of private equity backed deals rose from £4.7 billion in 2009 to £18.6b in 2010. That trend has continued into the current year. Whilst the overall value for Q1 is down, compared to Q4 last year, this reflects the fact that higher value deals (in the range £500 million to £1b) were fewer in number. The number of transactions at the lower end of the market held up pretty well.*


Over the past year, we have all seen a significant increase in the appetite and financial capability of trade buyers to make acquisitions, even though bank lending remains tight. In addition to this, private equity and venture capital firms have been extremely busy and are flush with cash which needs to be invested somewhere.


All this may lead you to believe that boom times are just round the corner, but not so – just yet anyway, I believe. The recession took its toll and it will be sometime before we see a return to the aggressive markets we saw in 2005 -2007. A combination of restricted credit and caution on the part of buyers means that pricing generally remains realistic, and sellers are grudgingly accepting this. However, there are some ‘hot’ sectors where we are beginning to see some pressure on pricing, for example:


• Online retailing deals update Sale of Kell Systems


Completion Date: 15/04/2011 Target: Kell Systems Acquirer: Scheider Electric (UK) Deal Value: Confidential


Details: Acted on behalf of 24 selling shareholders on disposal of entire issued share capital of Kell Systems Funding: Working capital of purchasers Corporate Finance Advisers: Grant Thornton Legal Advisers: Pitmans, Pinsent Masons Financial Due Diligence: N/A Commercial Due Diligence: N/A


Oddbins


Completion Date: 04/2011 Target: Oddbins Acquirer: European Food Brokers Deal Value: Undisclosed


Details: Sale of certain trade and assets of Oddbins (in admin- istration) Funding: N/A Corporate Finance Advisers: Spectrum Corporate Finance LLP Legal Advisers: N/A Financial Due Diligence: N/A Commercial Due Diligence: N/A


www.businessmag.co.uk


Completion Date: 03/2011 Target: IOT (Holdings) plc Acquirer: Sharp Electronics UK Deal Value: Not disclosed


Details: KPMG advised Sharp Electronics UK on its acquisition of IOT holdings plc Funding: N/A Corporate Finance Advisers: KPMG Corporate Finance Legal Advisers: Baker & McKenzie (Sharp) Financial Due Diligence: KPMG Transaction Services Commercial Due Diligence: N/A


Green


Completion Date: 03/2011 Target: Phlexglobal Acquirer: Inflexion Private Equity Deal Value: Not disclosed


Details: Inflexion Private Equity has completed the buyout of Phlexglobal, a Buckinghamshire-based healthcare support services company


Funding: N/A Corporate Finance Advisers: N/A Legal Advisers: N/A Financial Due Diligence: KPMG Transaction Services Commercial Due Diligence: N/A


Next Deadline


The next Deals Update will appear in our July/August 2011 issue


Deadline for submissions is Wednesday June 8


Submissions are free. If you would like to submit deal information or to advertise on this page contact:


Tanya Liddiard 0118-9745308 tanya@elcot.co.uk


Elcot Publications is not responsible for the accuracy of information in the deals update section which is supplied by individual firms


THE BUSINESS MAGAZINE – THAMES VALLEY – JUNE 2011 Sunset


Completion Date: 15/04/2011 Target: Bristol Cars and Bristol Cars Services Acquirer: Kamkorp Autokraft Deal Value: Confidential


Details: Kamkorp Autokraft, part of the Frazer-Nash group of companies, advised by Pitmans LLP, has acquired the goodwill and assets of Bristol Cars and Bristol Cars Services


Funding: Private Equity Corporate Finance Advisers: RSM Tenon, Marlow Legal Advisers: Pitmans Financial Due Diligence: N/A Commercial Due Diligence: N/A


Bristol Cars


• Healthcare/pharmaceuticals • Facilities management. To sell or not to sell?


Most commentators I have listened to have said that the market is moving away from being a ‘buyers market’ towards a ‘sellers’ market. If forced to say where we are in this cycle, most say the pendulum is evenly poised at present between the two.


So, is now a good time to sell, or should one wait until the market is more in the sellers favour? The problem with waiting, is that it might be some time – possibly three to five years – before we see a general pick up in price levels. In the meantime, the benign tax regime that exists may no longer do so. Also, there is a deal to be said for first-mover advantage.


Even if you remain unconvinced that now is not the optimum time to sell, if a disposal is on your horizon, now is a good time to start the process going, because having the luxury of a two-three year lead in period means there is much you can do to enhance the value of your business in the eyes of a potential buyer.


*Source: Centre for Management Buyout Research.


Details: Tim Wallbank 01295-270200 www.whitleystimpson.co.uk


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