20 corporate finance
Baby boomers set to boost activity?
Business owners, particularly those born in the post-war baby-boom years, may now be ready to sell and help prompt increased activity in the corporate finance sector, writes John Burbedge
With many baby-boomers considering their retirement options, wealth reinvestment and even business exit plans may well become an increasing feature of the market, say RSM Tenon partners Peter Vandervelde and David Copley.
The 2008 recession shelved the retirement plans of many. “Now, they have ridden out that downturn but, with the economic future looking fairly flat, they appear to be saying: We’ve waited long enough,“ said Vandervelde.
Enquiries from retirement- focused baby-boomers have increased for the RSM corporate finance team, based in Southampton, Reading and London, but that isn’t the only area of encouraging activity.
Locally, the software and IT services sectors are flourishing, with noticeable consolidation and PE interest. Modern website technology is improving many companies’ marketing.
Waste and renewable energy continues to develop strongly; skills training and financial services (insurance broking and credit management) are equally faring well.
Retail is still challenging, said Copley, although there are opportunities in niche markets.
“Construction is said to take you into recession and out of it as well. The housebuilders seem to be gearing up again,“ Vandervelde added.
“It is very easy to say that the economy is bumping along the bottom, but from our perspective, it’s actually doing much better than that.
I’ve definitely seen worse corporate finance markets.“
The total volume of UK mergers, acquisitions, flotations, rights issues and placements was up by 3.4% in the first nine months of 2012 compared to 2011. Also, the number of bank debt-funded
www.businessmag.co.uk
CorpFin’s M&A Activity YTD 2012, Advisor League Tables from 20th place to achieve the No 2 position for UK M&A volume.
Vandervelde, RSM Tenon’s national head of corporate finance, commented: “While delighted to be recognised as a front-running adviser, we are never complacent. We know our position relies upon us delivering excellent advice and quality work for clients, whether they are start-ups, SMEs or growing mid-corporates.“
Funding is not always a problem say Vandervelde and Copley. “There is plenty of money out there for quality propositions and sensibly geared deals.“
“Small and medium-size PE houses are putting up cash, often pure development growth capital, both here and overseas, although we are not seeing many £25m-plus PE deals at the moment,“ said Copley.
Peter Vandervelde (left) and David Copley
deals has increased in the UK overall.
RSM Tenon’s own online ’Tracker’ survey provided encouraging signs that the UK economy is steadying, reporting that insolvencies are declining and are currently at their lowest level for several years (although many ’zombie businesses’ may still be fighting battles to survive).
“Deals happen when there is a common certainty, and deals are happening now because everyone is pretty certain that things are not going to be great for the next two years,“ Vandervelde observed.
Those deals tend to be driven by cash-rich corporates or involve private equity houses looking to invest in quality, added Copley.
“Last summer’s eurozone troubles fractured the fragile confidence returning to markets. Now a year on, boosted by Britain’s summer of success, we can see that confidence coming back, but 2013 will remain a cautious time for investment.
“There is no obvious catalyst to ramp things up.
It will be slow progress,“ he predicted.
While overall volumes and values of deals have been hit by lack of post-recessionary funding and confidence, there are economic recovery signs – not least in the financial intermediary sector.
In its October Business Monthly Report, global research company Experian CorpFin reported the sector as the UK’s most active in September. Mid-market activity, RSM Tenon’s client heartland, was up by 2.8% after a four-month consecutive downturn.
RSM Tenon’s own growing professional workbook reflects this activity. This year the corporate finance team has advised on several prestigious deals, including the sale of toy retailer Hamleys to Groupe Ludendo for £60 million.
Copley personally advised on the sale of Eastleigh-based display technology company IGT Industries to Stadium Group. “Despite the challenging economy, there continue to be progressive businesses looking to grow by strategic acquisition of niche companies like IGT.“
RSM Tenon is progressing too. It has soared up the Experian
THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – DECEMBER 12/JANUARY 13
Vandervelde highlighted a trend for US private equity to use the UK as a financial hub and professional advisory base for investment into Europe, largely focused on Scandinavia.
Despite scepticism when created, the UK Business Growth Fund supported by five high street banks was working well to help SMEs, Copley and Vandervelde agreed.
“You have to take your hat off to them. They’ve done approaching 20 deals this year; no other PE house has done that.“
(The first
BGF deal was with Southampton- based Benefex, with due diligence performed by RSM Tenon).
The government-supported £2.4 billion Regional Growth Fund was also beginning to make a difference, with its opportunities for grants and loans for business projects creating sustainable growth and employment.
“I think it is down to the adviser community to make people fully aware of these funds as well as more conventional routes.“
Details:
Southampton – 023-8064-6464 Basingstoke – 01256-312312 Reading – 0118-9530350
www.rsmtenon.com
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