corporate finance
Deal flow continues at a pace despite Brexit concerns
There has been no let-up in the volume of M&A transactions in the Solent region, writes Rob Holmes, director at WK Corporate Finance, Winchester
Political and economic instability are usually factors that cause acquirers to exert caution. It is against this back drop that UK M&A activity has defied expectations, as transaction volumes have continued to increase in 2018.
UK M&A totalled $120 billion and 681 deals in Q1 2018, more than twice the value of transactions in Q4 2017 of $51b and 586 deals and only a little behind the $147b and 1,045 deals seen at the peak of the market in Q1 2007.
The key reason for this appears to be due to the age old dynamics of supply and demand.
A large proportion of owner-managed businesses remain in the ownership of entrepreneurs from the ‘baby boomer’ generation. Many of these individuals are looking to sell their businesses in order to retire. Post credit crunch, valuations have returned to sensible levels and sellers continue to benefit from historically low rates of capital gains tax. The supply of businesses coming to market is therefore strong.
The demand for acquisitions has also been strong, buoyed by several factors. Firstly, and perhaps most importantly, the continued weak pound has made acquisitions in the UK by overseas buyers more price competitive. The value for inbound transactions jumped from $11b and 133 deals in Q4 2017 to $67b and 177 deals in Q1 2018. Secondly, strong availability of cash from institutional investors, High Street banks, challenger banks and specialist providers of finance have lubricated the wheels of the M&A markets. Thirdly, high stock market prices have underpinned growth in acquisitions from listed companies.
Despite concerns over Brexit and other political uncertainties, the market for M&A transactions remains buoyant and valuations strong. This, combined with low rates of capital gains tax, make now an ideal time to sell a business.
The WK Corporate Finance team, based in Winchester and covering the Solent region, have advised on a number of recent local transactions, including:
• The sale of a minority interest shareholding in Geotech Soil Stabilisation to Mobeus Equity Partners
• The sale of Stewarts Coaches to National Express Group plc • The sale of Shire Systems to AIM listed Elecosoft plc • The sale of ORS Group to AIM listed Restore Group plc • The acquisition by Lucketts Travel of Mortons Travel.
We are always keen to meet with local business owners to understand their ambitions, explore their options and explain how we may assist in achieving their aspirations.
For more information on how WK Corporate Finance can assist you in selling your business, contact Rob Holmes:
rob.holmes@wkcf.co.uk 07812 997165
wkcorporatefinance.com
THE BUSINESS MAGAZINE – NOVEMBER/DECEMBER 2018
businessmag.co.uk
71
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