North West M&A market jumps 36% in first half of 2021

EG Group co-CEOs Mohsin, left, and Zuber Issa

The North West mergers and acquisitions (M&A) market made a strong start to the year, the latest Experian M&A Review revealed today (July 30).

Focusing on the first half of 2021, it showed the regional market was up by 36% on the corresponding 2020 figures, with 438 transactions valued at £6.9bn.

This half year is the fourth largest in terms of volume over the past decade, with only the second half of 2018 (471), H1 2019 (449) and H1 2016 (463) seeing higher levels of activity.

The value statistics continue the upward trend that began in the second half of 2019, with a 2.5% increase on last year’s results.

The volume of development capital transactions has remained relatively consistent compared with last year, with 57 transaction in the first half of 2021, compared with 56 the previous year, while acquisitions represented 64% of all transactions with a total volume of 283 – up from 188 in the first half of 2020.

Other notable increases came in the volume of employee buyouts, which appear to be an ever more popular choice for founders in the North West when they are exiting a company.

The North West region represented 11% of the total volume of UK M&A and contributed to five per cent of the value.

The largest recorded transaction for the North West in the first half of 2021 saw Blackburn’s Euro Garages, the petrol forecourt retail convenience stores group controlled by the Issa brothers, agree to acquire the forecourt business of Asda Stores, the wholly-owned UK retail subsidiary of US retail giant Wal-Mart, for £750m.

Another transaction of note was the investor buyout, led by TDR Capital of Arrow Global Group of Manchester, provider of debt purchase and receivables management solutions to mainstream creditors.

Meanwhile Bury-based JD Sports Fashion features twice in the top 10, with an acquisition of US-based DTLR Villa for £495m and a rights issue raising £464.2m.

In the region’s biggest private equity deal, Wilmslow housebuilder Morris Homes received a £140m investment from Atlantic Park Strategic Capital Fund to support the company’s continued development and performance.

From the 18 sectors Experian analyses, 11 industries in the North West M&A market saw a positive increase in the volume of deals, two remained consistent year-on-year, and five sectors saw a dip in figures.

Professional services and Infocomms both had more than 50% increases, returning figures of 124 and 101 transactions, respectively.

In terms of value, wholesale and retail was the highest performing sector thanks, in part, to the previously mentioned deals by JD Sports Fashion.

The education and waste management industries saw particularly strong year-on-year growth, while the biggest decline was seen in other service activities.

Meanwhile, the upward trend in the market was evident in the funding statistics, with the number of cash, bank debt and private equity-funded transactions increasing in volume terms, although further analysis shows that, although the quantity of PE and debt-funded deals was up, their market share was down slightly year-on-year – private equity-funded transactions dropped from 21% to 20% while bank debt fell from eight per cent to 7.5%.

HSBC was the most active debt provider in the North West and LDC the most prolific investor.

Gateley was the most active legal adviser in the area with 30 transactions in total, followed by DWF with 23 and Addleshaw Goddard with 21.

Meanwhile, Addleshaw Goddard is top of the rankings in terms of value with a total of just over £1bn in assists. Ashurst takes second position on the value table with £687m-worth of transactions.

K3 Capital claims the top spot on the financial adviser table with 30 transactions in the North West region.

Dow Schofield Watts is second and RSM third with 21 and 15 transactions, respectively. The value table was topped by international firm Rothschild, with £1.4bn in total values, followed by Citigroup and Goldman Sachs in joint second place, both advising on deals totalling £1.3bn.

Join us at the 2022 Rainmaker Awards