36 corporate finance roundup It’s been a year of mega-deals
M&A activity has not reached levels of frenzy, but the year has been buoyant – and the prospects look good for 2015, according to specialists.
In the mid market in particular, the appetite to do deals is high and pipelines are expanding, according to EY.
For corporates, growth is the strategy after five years of relative stagnation in the acquisition market – with 40% of companies anticipating pursuing acquisitions over the next 12 months.
A survey of CFOs, carried out by Deloitte, backed this up, finding that risk appetite was at a seven-year high. Deloitte pointed to the return of hostile bids for companies, and a continued boom in IPO activity.
Another trend was American companies looking to acquire UK targets. A Deloitte survey said: “Much of this increased deal activity can be attributed to the large cash reserves that US companies are holding overseas and, with high tax levies imposed on repatriating cash
back to the US, they have started spending it more aggressively in Europe.“
Conversely, there’s a significant number of UK domestic dealmakers acquiring overseas assets, according to EY.
The volume of deals in the first three-quarters of 2014 was up slightly (4.9%) to 2,244 when compared to this point last year and overseas deals completed by UK companies saw a 26% increase over the same period. The cumulative value of all deals completed over this period has also risen by a massive 110% to $272.9 billion, driven primarily by two large deals in life sciences and telecoms.
Jon Hughes, EY’s head of transaction advisory services for UK & Ireland, continued: “This year has been synonymous with so called mega- deals and, while these have been far from prolific in the UK, these multi-billion-dollar deals are having a positive ripple effect on the domestic M&A market. What they have done is create confidence in
M&A and trigger transaction activity further the down the deal chain.“
Overseas assets
The data highlights UK dealmakers’ increasing appetite for overseas M&A, with the volume of assets abroad being acquired by UK companies increasing by 26% over the first three quarters of 2014, from 505 to 635, with value increasing by a huge 187% from $33.1 billion to $95.2b.
Hughes added: “The appetite for overseas assets by UK companies confirms the UK as a significant player in the global M&A market. Although the UK economy is improving, UK businesses are also looking for growth in new markets.“
Can M&A compete with IPOs?
EY reveals that, while earlier in the year a significant factor holding back increasing levels of M&A was the buoyant IPO market with dealmakers struggling to compete on price, valuations are now cooling slightly.
B P Collins advises on the sale of prop maker for Hollywood films
Leading Thames Valley law firm B P Collins LLP has advised on the sale of a Buckinghamshire business which has supplied props to films including The Dark Knight Rises and Skyfall
The Thames Valley law firm advised the shareholders of Pinewood Studios-based Propshop (Model Makers) on the sale of the entire share capital to Voxeljet AG.
Founded in 2002, Propshop primarily focuses on building props for the entertainment industry. The company also provides specialised 3D modelling and scanning facilities.
Propshop has become Voxeljet UK, a wholly-owned subsidiary of the company, and will continue to support the film and entertainment industry, as well as the broad, growing consumer market for on-demand 3D printing services.
Lawyers from B P Collins’ corporate and commercial and employment teams acted on behalf of the shareholders of Propshop throughout the sale, the value of which has not been disclosed.
Partner Diane Yarrow said: “B P Collins has
www.businessmag.co.uk
had a trusted relationship with Propshop (Model Makers) and its shareholders for over four years.
“We were pleased to have advised the owners and founders of the Pinewood Studios-based business, James and Amanda Enright, on the sale of their shares, ensuring a smooth transition to their new posts reporting to the management board of Voxeljet AG.”
James Enright, founder and chief executive of Propshop, added: “We’re really excited to be working with Voxeljet and the opportunities that it presents. We have a great relationship with B P Collins and their passion and experience around this type of transaction has been invaluable throughout.”
Enright will now join the company as managing director of Voxeljet UK and vice president for consumer markets.
THE BUSINESS MAGAZINE – THAMES VALLEY – DECEMBER14/JANUARY15 Diane Yarrow
Details: Diane Yarrow 01753-279022
commercial@bpcollins.co.uk
Hughes continued: “Earlier in the year it was suggested that the resurgent IPO market was helping to inflate asset prices and limiting corporates and PE houses' ability to compete and transact. IPOs are now being far more sensibly priced which may boost rainmakers’ chances of securing a place at the deal table, to bid for assets that earlier in the year could have been a pure IPO play.“
Sentiment is improving but risks remain
Stable asset prices as well as increasing confidence in stability of the global economy are encouraging a more buoyant outlook for M&A, but EY chief economist Mark Gregory heeds a cautionary note.
He said: “Equally, it is important to remember that none of the risks have gone away. There is a strengthening trajectory of activity, both in the UK and globally, with plenty of IPOs, M&A and PE activity but there is certainly no return to a boom period.“
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