North West M&A activity and values slow in first half, latest stats reveal
Mergers and acquisitions activity in the North West has fallen by 14% in the first half of 2024, compared with the same period a year ago.
In the latest UK-wide M&A review by Experian, the latest stats show the total deal volume so far in H1 2024 across the region is 411 deals, which is five per cent lower than the average half-year total over the past 10 years.
Deal values are unpredictable at best, and so far, during H1 2024, they have failed to reach the highs experienced in H1 2023, dropping 60% from £12.8bn to £5bn.
However, compared with H1 2022, despite 19% fewer deals recorded, value is 26% higher.
The main culprit in the diminished value is the decline in large and mega deals. So far this year, mega deals have been notable by their absence, in stark contrast to the three deals reported in the first half of 2023 valued at £8bn.
Large transactions have fared slightly more favourably, with a drop of only two transactions down to nine deals, valued at £3.5bn.
However, there has been a marked expansion in mid-market M&A volume, with a 48% increase to 40 transactions valued at £1.362bn.
As the year progresses, development funding deals continue to return strong growth figures, with 31% more transactions so far in H1 2024 compared with H1 2023.
The value of these deals has also increased from £352m to £1.45bn.
Acquisitions, while still the most popular deal type in the region, experienced a slump in transactional activity by 19% to 272. There was a North West element in approximately 14% of all UK transactions by volume this year, while North West firms contributed around three per cent of total deal value.
In terms of headline deals, although the North West has yet to break through the mega market threshold in H1 2024, the volume of large deals has remained relatively stable.
The largest transaction in the region is the cross-border acquisition by Bury-based JD Sports Fashion, the sports and leisurewear retailer, of Hibbett Sports, an operator of athletic speciality stores located in the USA, for £887m.
The acquisitions that make up most of the headline deals in the North West are a combination of several industries and North West bidders and targets.
The largest funding transaction and the second largest deal in the region was the £800m combination of private equity and debt funding raised by RSK Group, the Helsby-based provider of engineering, environmental and technical consultancy services.
The company will benefit from a preferred equity investment from a consortium led by Searchlight Capital Partners and Ares Management Corporation funds.
In addition, Ares has committed an incremental £300m debt facility to support RSK’s growth plans further.
Rounding off the top three is the planned £780m acquisition by Coventry Building Society of Manchester-based Co-operative Bank Holdings, another high profile banking consolidation deal.
Most industry sectors in the North West have witnessed a deceleration of M&A activity, which is in line with the subdued deal activity nationally.
The professional services sector is the most active industry, with 95 deals valued at £1.1bn. This represents a 23% decline in volume but a nine per cent increase in value.
Wholesale and retail volumes are also down by 22%, to 90 deals announced so far in 2024. Value in the sector failed to reach last year’s highs, declining 86% from £11.5bn to just £1.7bn.
In the region, only two industries experienced an upward trajectory in deal making – health and hospitality.
Responsible for a relatively small portion of the overall market, health sector M&A deal volume rose by 19% to a total of 50 transactions valued at £110m – a 28% increase on H1 2023.
Hospitality, although an even smaller segment of the North West region’s M&A landscape, saw volume and value rise by 15% and 443%, respectively, to 15 deals valued at £71m.
Although the volume of development capital deals was up by 31% in H1 2023, venture capital-funded transactions ebbed slightly by six per cent to 68 transactions in H1 2024.
A small percentage of the deals financed by venture capital fell outside the popular development capital deal type. These included some SBO, IBO, and, a reverse takeover.
Shard Credit Partners, a partner to Sorted, Manchester, has continued its support with an equity investment of £1.6m into the enlarged group, which was created in a reverse takeover by Cheltenham-based Location Sciences Group.
The North West debt funding market has remained relatively robust, with 45 transactions this year, compared with 44 in H1 2023.
The most active lender in the region was HSBC, with seven transactions across multiple sectors as the debt provider in growth funding transactions or supporting management buyouts.
Thincats was the second most active debt provider with four transactions, comprising two acquisitions, one growth funding and one IBO.
In the Legal Advisor rankings, Mills & Reeve topped the table, storming up from 13th at the same point last year, with a volume of 20 deals, knocking the previous year’s table-topper, Napthens, into second spot, with 19 deals.
Bolton-based K3 Capital Group claimed first place in the financial adviser table, once again, completing 21 deals. A volume of 14 deals meant Grant Thornton remained in second slot.
