Deals market bounces back, with second highest levels in a decade

The North West M&A market experienced the second highest deal volumes in the past decade.

According to the Experian M&A Review 2021, a total of 883 transactions, worth a total of £22bn, were concluded.

It represents a 23.5% increase on 2020’s 715 transactions, but also a three per cent improvement on the 2019 pre-pandemic figures.

The data reveals that small deals were up by 20.6% from the previous year, while the mid-market returned a 15.4% increase. Large and mega deals made a return in 2021, with a 30% and 25% increase, respectively, showing renewed confidence in the market and the funds available for big ticket transactions.

Also, the value of large transactions has increased for the North West by 64%, from £5.1bn to £8.3bn.

The most popular deal type across the region was acquisitions, which numbered 580 transactions, compared with 422 in 2020.

Experian says an interesting point is that there was a 220% increase in the volume of employee buyouts during the year, up from five to a total of 16, the majority of which were in the wholesale and professional services sectors.

Companies based in the North West contributed around 13% to the total volume of UK deals and seven per cent of total value.

Among the headline deals of the year were four recorded during the fourth quarter that made it to the top 10 list for the North West, contributing to the surge in overall deal values during the closing months of the year.

The largest of these was the investor buyout led by CVC Capital Partners of ekaterra, the global tea division of consumer goods Unilever, which retains its registered office on Merseyside, in a deal valued at £3.8bn.

December also saw the acquisition of Interactive Investor, the Manchester-based online investment platform by abrdn, formerly Standard Life Aberdeen, for a total consideration of £1.5bn.

Rounding off the top three mega deals for the North West was the offer to acquire Blue Prism Group, the Warrington software developer by Bolt Bidco, a subsidiary of US financial software company SS&C Technologies.

This followed a heated takeover battle for the firm in competition with an investor buyout vehicle led by the Vista Funds. The SS&C Technologies offer was £24m higher than Vista’s original bid from September.

Most of the 20 industry sectors saw an increase in transactions, although there were five where the volume dipped year on year – most notably in real estate, where deal volumes fell by almost six per cent, even while the total value of property sector deals rose by 17%.

The top performing sector for 2021 was professional services, with a total of 229 transactions, up from 189 in 2020, although the recorded value of these deals dipped by 11%.

Meanwhile a sharp upturn in technology-related deals saw deal volume in the information and communication sector up by 31% year on year to rank as the North West’s second busiest sector in 2021.

Aside from the Blue Prism deal, notable deals included US gaming giant Electronic Arts’ £1bn acquisition of Wilmslow-based mobile gaming outfit Playdemic in June.

The latest data shows that the North West has seen a surge in transactions funded by private equity and bank debt, up by 21% and 25%, respectively. During this year there were 175 PE-backed deals, around 20% of the North West total, with Maven Capital Partners (12 deals), LDC with eight and Praetura Ventures on seven the top three investors.

Praetura Commercial Finance, which completed eight transactions, sits as the North West’s leading debt provider in 2021, completing eight deals, just ahead of HSBC’s seven, although the recorded value of HSBC’s deals sat higher than Praetura Commercial Finance’s total of £19.7m, at £190m.

When it came to advisers, Gateley was the most active legal adviser in the area with 45 transactions in total, followed by Addleshaw Goddard with 42 and Brabners with 41.

Meanwhile DLA Piper sat top of the rankings in terms of value with a total of just over £4.4bn in assists.

Freshfields Bruckhaus Deringer took second position on the value table with £3.9bn-worth of transactions.

Elsewhere, K3 Capital claimed the top spot on the financial adviser table, with 61 transactions in the North West region. Dow Schofield Watts took second and RSM third, with 37 and 36 transactions, respectively.

The value table was topped by international firm Rothschild with £2.7bn in total value, with Goldman Sachs second on £2.6bn, followed by Jefferies in third place, advising on deals totalling £2.5bn.