Uncertainty sucks life out of North West M&A markets
The North West mergers and acquisitions (M&A) market has followed the national picture, with a fall in activity during the year-to-date.
Jane Turner, research manager with business services group Experian MarketIQ, said, despite a favourable funding environment, steady, if slow,
economic growth, and pockets of strong activity in high growth sectors such as fintech and AI, the unsettled UK outlook has cast a shadow over overall M&A activity with almost £150bn shaved off the total value of UK M&A year-on-year.
Third quarter deal volume was at its lowest level for almost a decade, she added.
She said: “The prevailing ‘wait and see’ attitude to deal making looks set to persist, in the short term at least.”
The North West saw a dip of eight per cent in M&A activity in the year-to-date, with just under 26% shaved off the total value of deals.
2019 has seen a total of 598 deals worth £4.7bn involving a North West company, compared with 652 deals worth £6.3bn in the same period last year.
Mega deals in the region are noticeable only by their absence, as the region failed to see any deals break the £1bn barrier in the first three quarters for the first time since 2008.
Overall, the North West accounted for just under 12% of all UK deals, but only a little around three per cent of their total value.
August saw the announcement of the largest deal of the year for the North West as Cheshire-based Vita Student Management sold a number of student buildings across the UK, including four assets in Manchester, to Deutsche Bank’s asset management arm DWS, for £600m.
The deal will allow Vita to scale its growth both domestically and internationally, including its first international scheme in Barcelona.
Back in July, Bruntwood SciTech, which operates a network of innovation districts aimed at companies in the science and technology sector, secured a three-year £185m funding package from Santander, NatWest, HSBC and Lloyds to support its sustainable development and growth in one of the largest real estate debt transactions outside of London this year.
Professional services (143 deals) and manufacturing (140 deals) were the most active industries in 2019 to date, with volumes relatively stable in comparison with the same period last year.
Values across both sectors did fall, with professional services down 56% and manufacturing by 32% in comparison with 2018’s numbers.
Wholesale and retail was the third most active sector, although its performance in terms of volume and value saw a decline of 26% and 60%, respectively.
Infocomms fared slightly better, with the 111 deals recorded, just three per cent fewer than in 2018, and up 13% in value.
Approximately 17% of all North West deals in the year-to-date were funded, at least in part, by private equity, with Maven Capital Partners being the most active investor.
Bank-funded deals accounted for 14% of the deals recorded, with HSBC and Barclays being the lenders of choice for the majority of dealmakers in the region.
The title of the North West’s busiest legal adviser in 2019, to date, falls to Knights, with the firm having advised on 29 deals in the region so far.
In second place was Gateley on 24, followed by Addleshaw Goddard and Slater Heelis each on 21.
Addleshaw Goddard topped the value table with £667m, despite seeing the total value of its deals fall as the offer for KCOM Group Plc by the Universities Superannuation Scheme was cancelled in favour of a rival offer from Macquarie.
Second position went to Squire Patton Boggs on £662m, with Cravath Swaine & Moore in third place on £527m.
Grant Thornton retained top spot as most active financial adviser with 34 deals, followed by Dow Schofield Watts on 20 and KBS Corporate on 17.
Rothschild advised on £674m-worth of deals, taking first position in the value rankings, followed by Peel Hunt on £396m and Dow Schofield Watts on £256m.
