Deals market is improving, say advisors

THE region’s corporate finance market is showing signs of improvement in terms of both the value and volume of deals, according to advisors.

Speaking at a Pro.Manchester lunch hosted by chief executive John Ashcroft yesterday, a panel of the city’s senior corporate financiers agreed that the market for mergers and acquisitions generally appeared to be stronger in 2010 than in the previous 12 months. Panel members included Paul Lupton of Deloitte, Jonathan Boyers of KPMG, Ken Williamson of Ernst & Young, Phil Adams of Altium, Andy Parker of PwC and turnaround expert Graham Hallworth, who is currently executive chairman of Handforth-based gyms chain Total Fitness.

Williamson said that there are signs that the deals market is returning to a level of normality, adding:- “it’s taken a while to find out what that level is”.

“It’s not the level we saw in 2005 or 2006, but it’s not 2009 either,” he said.

“The difference between this year and last year is that growth and recruitment are on people’s agendas.”

Several panel members said the higher levels of activity they were experiencing would translate to deal completions during the latter part of 2011 and early 2012.

“There are a number of private equity processes that are beginning to kick off,” said Boyers, adding that there were also a number of corporate buyers with cash who were looking at acquisition opportunities.

“We’ve got the bones of an improving market,” he said.

Hallworth, who is a non-executive director of Clearwater Corporate Finance, said that there was still some nervousness among funders, which continues to have a negative impact on asset pricing.

“There is still the potential to waste a lot of time trying to get deals funded,” he added.

Adams, however, argued that the likelihood of deals completing seemed to depend on the quality of assets, and to some extent on the sectors in which the companies were involved.

“We’re now seeing a lot of internet deals. Ten years ago everyone was talking about deals in that space that but there are now some really good profitable businesses right across Europe in that area and there’s some good growth there.

“The other area which kicked off for us last year was renewables,” he said. “That felt like it was a bit of a dotcom thing but there area businesses around energy efficiency where they’re actually becoming quite profitable.”