Buy and build acquisitions hit record levels in the North

Neil Mitchell
X The Business Desk

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The number of acquisitions made by private equity backed businesses in the North hit record levels in the first quarter of 2021, with 25 transactions completed in just three months.

The latest analysis from Rickitt Mitchell’s Buy and Build Barometer, conducted in partnership with Experian Market iQ, reveals a 56 per cent rise in the figures seen in the corresponding quarter last year.

Q1 2020 saw 16 deals completed, prior to the first Covid-19 lockdown, with the latest figures more than double the 11 deals in Q1 2019.

Transactions completed during the first quarter include the £14.7m acquisition of Salford-based Starcom Technologies by Node4 Ltd, Leeds-based broadband provider Liberatis’ purchase of Vision Fibre Media, and the sale of cell-line control manufacturer HistoCyte Laboratories, headquartered in Newcastle, by Sweden-based research organisation Atlas Antibodies.

Northern-based companies demonstrated appetite for overseas acquisitions, with nine cross border transactions completed during the first three months of 2021, representing 36 per cent of all deals.

The USA was most attractive, with three deals finalised, followed by two in Sweden, and one in each of Norway, Germany, Canada and India.

This growth was also reflected nationally, with 168 transactions completed across the UK – a rise of 85 per cent on Q1 2020. 91 deals were completed in the first quarter of 2020, prior to the first Covid-19 lockdown, with 57 deals finalised in Q1 2019.

This was also the third successive quarter that transactions hit triple figures, with the £980m value in Q1 2021 also the highest levels for a quarter since the end of 2018.

This figure was aided by the completion of the £498m acquisition of Dotmatics Ltd, the Bishops Stortford-based provider of informatics software and services, by San Diego headquartered Insightful Science.

Neil Mitchell, partner at Rickitt Mitchell, said: “The start of 2021 has seen record levels of buy and build activity by Northern private equity-backed businesses, who have learned from previous economic downturns that there is a real opportunity to generate value as the economy recovers.

The dealmaking environment is also aided by acquirers having access to more liquidity, as well as sellers setting more sensible valuations.

“It will be interesting to see how appetite evolves over the coming months, especially as we progress through the government’s roadmap out of lockdown.

“We still expect to see private-equity backed companies targeting overseas bolt-on transactions, in order to drive returns, taking advantage of the current optionality and liquidity within the UK debt markets.”

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