M&A deal flow on its way

THE mergers and acquisitions market will start to pick up in the second half of the year, according to a corporate finance expert at PKF.

David Smith, who heads up the corporate finance team at accountancy firm PKF and is based in Manchester, predicts the North West deals market will pick up during the rest of this year, as participants adjust to new economic realities.

Mr Smith said: “Although deals fell sharply in the second half of last year and I don’t expect a return to anything like normal deal making conditions until the latter six months of 2009 at the earliest, I believe activity will slowly increase during the months ahead.”

Mr Smith said he expected distressed deals to drive this type of activity in the region, particularly in the first half of the year, with forced sales providing opportunities for well-placed competitors and investors.

He said: “With valuations now beginning to fall in line with buyer expectations, private equity interest in the region, including support for management buyouts, is also returning with some private equity houses prepared to provide debt as well as equity with a view to refinancing deals when the debt market returns.”

But conventional mergers and acquisitions will become the North West market’s mainstay again, with timing depending on government measures and bank lending returning as a source for deal funding, he said.

He added: “Once some measure of certainty returns to the market, I expect a slow recovery in merger and acquisition deal flow, albeit at lower valuations than those seen in the 2007-08 boom.”