Deals market vibrant in 2022, with good prospects for current year

Jason Whitworth

Accountants and business advisor, BDO, said 2022 was another standout year for its M&A teams in Yorkshire and the North West, with 36 deals completed across the region, reaching a total value of more than £900m.

Nationally, BDO advised on 362 deals in 2022 with a total value of £31.2bn.

Among the North West deals, 69% of transactions involved private equity. Deals spanned a range of sectors, including technology, manufacturing, recruitment, financial services, food and drink, leisure, transport and logistics, and construction and business support services, as well as healthcare and life sciences.

Jason Whitworth, corporate finance partner, M&A, in the North, said: “When you consider the economic headwinds that have been blowing strongly against businesses in 2022, the regional deals market over the last 12 months has been extraordinarily resilient.

“Interestingly, deals are still getting done across all sectors, particularly those sectors where long term macro-economic and social tailwinds support long term growth. Specifically, deal volumes in business services, financial services and TMT remain strong, as the adoption of technology continues at pace and accelerated by a desire to realise cost efficiencies.”

Notable deals for the Northern teams include advising on digital agency CTI Holdings Limited’s investment by LDC, the sale of Hickory’s Smokehouse to Greene King, the acquisition of Taskmaster Resources by IPE Ventures, Synova’s investment in retail proptech platform Malcomm, the acquisition of TM Financial Forensics by HKA, Westbridge’s investment in Alpine Fire and the investment by NorthEdge Capital into life sciences marketing specialist ramarketing.

Jim Fieldhouse, managing director at BDO,said: “Consistently, we see fantastic management teams in great businesses, and business owners who have faced the most enormous struggles in recent years, who have taken everything in their stride and thrived. When you also consider the quality of businesses we have in the North, then there are so many reasons to be optimistic for 2023.

“The good news is that many corporates continue to see M&A as a core part of their growth strategy and investors have abundant capital. M&A drivers remain strong, as acquirers pursue digital transformation, green transition, new technologies, new growth markets and scaling up to become more competitive. As valuations have also softened from 2021, companies and investors understand there will be opportunities to seize.”

Meanwhile, EY’s strategy and transactions teams in the North of England advised on deals worth a total of nearly £3.8bn in 2022.

The top deals acted on in 2022 by the firm’s experts in the North included three worth more than £500m each, with the £740m divestment of Saint Gobain’s merchanting brands to STARK Group the highest value transaction of the year.

Another significant deal EY helped seal was the £667m divestment, by East Yorkshire-based Croda, of its Performance Technologies and Industrial Chemicals business to a wholly owned subsidiary of global food corporation Cargill Inc.

Following the successes achieved in 2022, and despite a challenging economic backdrop, EY’s teams in the North are optimistic about the prospects for 2023.

Mark Clephan, EY North corporate finance partner, said: “At EY, we invested very significantly in our people and capability across the North in 2022, and I am, therefore, not surprised, but nonetheless proud, of the size, complexity and importance of the transactions we advised on last year.

“Looking forward to 2023, the outlook remains uncertain, but we remain confident that the deals market will start steadily and improve throughout the year. Uncertainty persists over key business input costs and expenses, and similarly there is flux in end markets. However, consumer trends and volatile costs early in the year will likely improve, and growing confidence should facilitate increasing deal volumes.

“Deals are completed in times of both recession or economic growth – it is uncertainty that threatens transactions. We are seeing increasing confidence and believe that the picture will show consistent improvement throughout 2023.”

Mark Clephan

With sustainability growing in importance for businesses and society alike, there was a boost for clean technology in the North of England in the fourth quarter of 2022 as EY acted as lead advisor to Iduna as it secured up to £110m of funding from Octopus Energy Generation for the Manchester-based electric vehicle charging infrastructure business, Be.EV.

Significant appetite to invest in technology was also evident in 2022, with businesses continuing to pursue the largely untapped potential of digital capabilities.

Last year’s tech deals acted on by EY included, but were not limited to, SymphonyAI’s acquisition of financial crime detection business, NetReveal, from defence contractor BAE Systems, the sale of Warrington-based software company Talos360 to Lloyds Development Capital (LDC), and the purchase of leading salesforce consultancy, Pexlify, by Japanese PR and advertising firm, Dentsu Group, in a bid to strengthen customer transformation and technology capabilities.

Momentum in the technology sector is a trend EY expects to be consistent in the 2023 deals market, as businesses place an increasing emphasis on exploring the potential of maximising both efficiency and innovation through digital transformation.

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