Strong start to the year for North West deals market

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The volume of North West mergers and acquisitions (M&A) transactions in the first quarter of 2021 has edged up signalling positive growth for the year.

Figures produced by business services group Experian, showed that volumes increased in the first quarter by 5.43% to 233 transactions, up from 221 for the same period last year – and the highest since the second quarter of 2019 – indicative the worst impact of the pandemic on the North West deals market is over and signalling a “promising trajectory for the rest of 2021.”

The value of those deals increased by 110% to £4.2bn, up from £2bn with values boosted by a 75% increase in the large-deals value segment.

The mid-market was the strongest performing value banding, with 120% increase to 33 deals worth a total of just over £1bn.

The North West was the fourth busiest region of the UK in terms of deal volume, with 13.6% of deals having a North West element, while companies in the region provided around 5% of the UK’s overall value.

Zuber and Mohsin Issa of EG Group won EY’s overalll UK Entrepreneur of the Year award in 2018

The largest deal so far this year saw Issa brother’s Blackburn-based EG Group, the petrol forecourt and retail convenience store group, agree to acquire the forecourt business of Asda Stores for £750m.

EG separately inked a multi-billion pound deal to acquire Asda last year in combination with TDR Capital.

Elsewhere in the North West, Greater Manchester-based sports and leisure retailer JD Sports Fashion featured in the top ten list twice, with a fund raising on the stock exchange valued at £464m and the acquisition of DTLR Villa, a USA sportswear retailer, in a transaction announced in February at a total value of £495m.

The top ten deals involve seven public company transactions and sit mainly in the large value banding of over £100m, with no £1bn plus transactions so far this year.

The region’s six most active industries in term of M&A activity have all enjoyed a return to growth this quarter.

Professional services and wholesale and retail were the busiest sectors and were up 20% and 16%, respectively, year on year, while infocomms enjoyed a 39% increase in deals this quarter, up to 50 transactions.

Elsewhere, the volume of manufacturing transactions increased from 46 in Q1 2020 to 48 in Q1 2021, with values soaring to £621m, boosted by the £403m acquisition of medical device manufacturer Scapa Group by a subsidiary of US manufacturing conglomerate Schweitzer-Mauduit International.

With several deals in the regional top ten, the wholesale and retail sector was the North West’s most valuable sector, with the total value of deals soaring to £2.4bn (up from just £264m in the first quarter of 2020).

Acquisitions remained the most popular deal type this quarter with 142 transactions – one fewer than the results for Q1 2020 – while private equity investment also remains relatively stable with 30 transactions, compared to 33 last year.

Gateley retained its top spot in terms of volume of transactions with a total of 16 assists since the start of the year.

Addleshaw Goddard moved from tenth to second position with 12 transactions this quarter. In terms of value, the leader of the group was Addleshaw Goddard, with a total disclosed value of £891m, followed by Ashurst on £577m for the quarter.

K3 Capital

The most active financial advisor for the North West this quarter was K3 Capital Group with 15 transactions, with Dow Schofield Watts second with a total of nine deals.

Jane Turner, research manager, Experian MarketIQ, said: “Global M&A had one of its strongest ever starts to the year, with transactions worth upwards of £1tn inked in a bumper first quarter.

“If the UK market was a little less frenzied, deal makers here still enjoyed a strong start to 2021, building on the recovery that began in the second half of last year.

“The success of the vaccine roll-out and a rapidly improving economic forecast mean that business confidence is high, with advisory firms reporting bulging pipelines across a range of sectors – along with a real appetite for deal making.

“As the UK continues to open up and pent up demand in some of the sectors worse hit by the pandemic translates into deal activity, the outlook for the rest of the year looks positive.”