76 DEALMAKERS
Expert View THE MARKET
REMAINS BUOYANT by Pauline Rigby
Head of corporate, Forbes Solicitors
The North West M&A market was consistently busy throughout 2021 despite the ongoing pandemic.
Numerous factors have encouraged further activity such as the threat of changes to the present tax regime specifically relating to entrepreneurs’ relief.
However, despite those extraneous factors, it has been clear that there is consistent and exciting activity in the deals market.
As we approached the end of 2021 the market became increasingly buoyant, leading to the expectation of a strong start to 2022.
In terms of sectors, the North West has seen plentiful activity in manufacturing, tech and digital and retail, with no real changes to that expected in 2022.
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Preston-based health insurance and protection business, Santé Group, moved to acquire “a significant stake” in Dorset-based Santé Partners, again for an undisclosed sum and with accelerated growth high on the agenda.
Santé Partners was established in March 2020 by founder Adam Sherring, who has more than 25 years’ experience building successful insurance brokerages.
He launched the business to challenge existing insurance networks, while providing growth- hungry appointed representatives (ARs) with the tools needed to build successful brokerages.
An AR is a firm or person who runs FCA regulated activities by acting as an agent for a financial services business directly authorised by the Financial Conduct Authority (FCA).
Santé Partners will now form part of The Santé Group, which includes employee health
Some of those sectors worse hit by the pandemic and the unfortunate rise in concern due to the Omicron variant may mean a rise in M&A activity in those sectors, as opportunistic buyers seek out potential acquisitions. We may of course start to see a rise in insolvent transactions within these fields.
Funding for M&A activity in the region is plentiful too. with lots of lenders willing to fund acquisitions, specifically those within the Asset Based Lending (ABL) sector.
Private Equity (PE) houses are also prevalent in the region with more and more North West based businesses looking to PE houses as an exciting option to consider when reviewing an exit.
The mid-market is seeing the most activity as acquisitions by bigger players facilitate growth.
insurance and wellbeing company Nugent Santé, life insurance business Santé Life, and PMI and protection intermediary services business ArchAngel Broker.
Santé Partners manages a premium book of £5.9m and is on target to double that figure by the end of 2022, with the Santé Group premium book also hitting £35m at the same time.
Santé Group’s chief executive Paul Nugent says: “The growth of Sante Partners has been hugely encouraging, bearing in mind the challenges that Covid presented, but welcoming the business into the wider Santé Group will accelerate its growth.
“It’s a perfect fit for us and offers our brands new routes to market by developing new distribution channels while giving private medical insurance professionals the chance to build a successful brokerage.”
Another deal saw east Lancashire based Furnico Furniture acquired by La-Z-Boy, becoming its first European manufacturing site.
The Lancashire firm, which has a 285-strong workforce, has manufactured the world-famous recliners since acquiring the La-Z-Boy licence in 2008. Parent company La-Z-Boy Incorporated, headquartered in Michigan, USA, re-acquired the licence in 2017.
La-Z-Boy says it intends to continue production from the two factory sites in Nelson and Colne, with plans for a product showroom being discussed.
Furnico directors David Ellison, Stuart Shackleton and Nigel Ramsey will continue to lead the business. The manufacture of white labelled products for retailers in the UK and Ireland is set to continue, alongside La-Z-Boy branded products.
Keith Wilson, president of La-Z-Boy International, says: “Given the unprecedented issues currently affecting global sea freight, the timing of this deal will reassure our customers of shorter lead times and a dependable supply network.”
Looking ahead to what 2022 has in store, Steve Ivermee at EY says the emergence of the Omicron variant of Covid will reduce confidence in certain sectors.
He adds: “Sustainability and Environmental, Social and Governance (ESG) in particular, are becoming an important aspect of dealmaking, accelerated by the recent COP26.
“The UK remains an attractive target for inbound M&A particularly in areas it has strengths including financial services, fintech and high-end consumer and industrials.
“We have also seen continued activity in domestic consolidation and outbound M&A as UK companies seek to increase their global footprint.
“Private equity investments are likely to continue to drive the deals market as they seek to deploy their ample dry powder.
“We are also seeing evidence of a shift to a new cycle of dealmaking which follows the immediate reaction to the pandemic into a more considered phase where companies are reviewing all areas of their business strategy and looking to get fit for the future.”
SOLVING BUSINESS OBJECTIVES
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0333 207 1130 Offices in Lancashire, Manchester and Leeds.
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