Cautious optimism from dealmakers, says Deloitte
CONFIDENCE levels in the M&A and funding markets are increasing across the North West, according to new research.
Deloitte’s Northern Private Equity Confidence Survey (NPECS) gauges the mood of the North West and Yorkshire corporate markets, and collates the responses of bankers, corporate lawyers and private equity investors.
Key findings in the results include 95% of respondents expecting deal volumes to rise or remain at least at similar levels to 2010.
Deloitte said this was a welcome signal of confidence in the market as the flow of deal making activity last year showed a marked increase in deals completed with a value of more than £50m in 2010 compared to the previous 12 months.
Whilst the majority expected debt multiples to remain at similar levels to 2010, in a reversal of last year’s results, a larger proportion of bankers, when compared to private equity investors, expected to see more debt in deals this year.
Aziz Ul-Haq, corporate finance director at Deloitte in the North West, said: “The fact that there is a trend of bankers expecting a higher proportion of debt in capital structures relative to investors, may be an indication that there is a belief from those inside the banks that there is further bank funding available this year.
“However, it is likely that the quality of businesses being offered these deals will still be higher than a few years ago. Whether the more bearish view of investors reflects an increase in liquidity that has yet to be felt by the market, or scepticism about the rhetoric we have heard about the availability of funding, remains to be seen.”
When asked to predict the most active sectors for deal activity in 2011, the respondents identified manufacturing, healthcare, retail, technology, media and telecommunications.
