Value over volume distorts latest deals data

Experian deals data highlights trends

A small number of very large North West deals have distorted the annual release of Experian’s deals data, confirming what every funder and advisor in the North West market is feeling – deals are down again.

However, sentiment is still strong that a number of factors could still stimulate activity for a more buoyant 2024.

Reflecting on the data at the pro Manchester corporate finance lunch yesterday, a panel comprising: Erin Berry, Saffery; Jodi Birkett, Deloitte; Michelle Heptinstall, Thin Cats; and Lucie Mills, NorthEdge and the current Rainmaker of the year for 2023, Andrew Feeke of MHA Moore & Smalley discussed the impact on regional M&A.

The panel discussed how deals are taking longer to complete for a number of factors, including target businesses simply not being prepared enough, a resistance from some UK pension funds to invest, but concluded that 2024 is looking more stable and definitely more promising

There was a 109% increase from the previous year up to over £19bn. 

Not unlike the rest of the UK, the volume of transactions has declined, from the 995 recorded in 2022 to a more modest 893 for 2023.

Values increased by 100% year on year to a total of £19bn, but this was dominated by Dechra’s take private acquisition by private equity buyer EQT, one of five mega transactions – including the £1.3bn minority acquisition by Sir Jim Ratcliffe, of a 25% stake in Manchester United from owners Red Football, the US investment vehicle of the Glazer family. The United deal is the latest in a flurry of transactions that targeted the region’s professional football clubs, with eight clubs attracting the attention of investors in 2023. 

In October Manchester-based Bruntwood SciTech, which operates a network of innovation districts aimed at companies in the science and technology sector, secured £500m of additional investment to expand and redevelop existing science and technology campuses and city centre innovation hubs across a secured 3.6m sq ft development pipeline. 

Meanwhile, there have been several cross border transactions recorded in the North West, including the £706m acquisition of Suncor Energy UK Holdings, Altrincham, by Norwegian oil and gas company Equinor, along with the reverse takeover of Altrincham-based CorpAcq by US SPAC Churchill Capital Corp.

Experian also crunched the numbers and concluded that although a there was a 10% reduction in deals volume, the North West still outperformed the wider UK decline and represents a relatively robust performance against a very challenging economic back drop, as well as sitting comfortably ahead of average annual transaction volume over the last decade. 

Value analysis shows that while small and midmarket deals have declined, large deals remain consistent at 23 and mega deals were up from zero in 2022 to five.

Investor buy-outs were among the many deal types that witnessed a resurgence in 2023, with 14% more deals than last year. Other deal types which grew in popularity during the year included divestments, minority stakes, mergers and reverse takeovers. However, acquisitions and venture capital transactions – while still the most prevalent deal types – both fell in volume by around 15%.

Coupled with the increase in high value deals, the M&A market in the North West has a lot to be encouraged by as it takes tentative steps into 2024. There was a North West element in approximately 14% of all UK transactions by volume, while North West firms contributed around 10% of total deal value.

By sector, activity in the financial services sector increased to 112 transactions worth £3.6bn, while construction increased by 21% to 94 deals during 2023. 

Wholesale and retail was the most valuable industry in the North West, with 16 large and mega transactions in the sector during 2023 – including two high value European acquisitions by Bury based sports and leisurewear retailer, JD Sports Fashion. In terms of volume of activity, the wholesale and retail sector remained relatively stable compared to last year with a small 2% drop from 222 last year to 217 in 2023.

There has been a decline of around 14% for private equity funded transactions compared to last year’s figures, as a result of the drop in the number of development capital deals.


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