North West sees 16% growth in 2024 deal-making – but fears of slow start to 2025

Merger and acquisition (M&A) deals soared by 16% in the North West during 2024, with a total of 1,904 transactions conducted.

However, the latest report by data broker and consumer credit reporting company, Experian, showed that the overall value remained largely unchanged, compared with the 2023 levels.

The North West was the UK’s fourth most active M&A market last year, with the region’s businesses having a part in 15% of total UK deal volume, while contributing seven per cent of total transaction value.

October 2024 marked the busiest month on Experian record for deal volume in the region, with 199 transactions. This surge reflects a broader UK trend, as companies rushed to finalise deals ahead of budget changes concerning capital gains tax and carried interest rules.

Deals in the sub-£10m price range saw a 20% decline in both volume and value compared with 2023. Conversely, the mid-market demonstrated robust growth, with deal numbers rising from 66 in 2023 to 79 in 2024, and value increasing by 51% from £1.9bn to £2.8bn.

High value deals experienced mixed results. Large cap deals fell by 12% in volume but maintained their value, while mega deals dropped by 40% in volume and six per cent in value.

Despite declines in sub-£10m deals and high value transactions, the overall stability in deal value indicates a resilient market, said the report.

The sustained value of large cap deals underscores ongoing confidence in substantial investments, while the modest decrease in mega deal values suggests a cautious, yet not overly pessimistic, outlook among the largest market players.

The region’s three mega deals saw significant UK assets transitioning to overseas ownership.

Electricity North West engineer

Early in the year, Spanish energy company Iberdrola acquired 88% of Electricity North West, the Stockport-based owner of the electricity distribution network for North West England, for a total value, including debt, of £4.15bn.

The other two mega deals were announced in December. The £4bn buyout of Manchester-based smart meter and energy management company Calisen by EQT and GIC was another notable transaction in the infrastructure and energy sector, underscoring the confidence major global investors have in the UK’s energy industry.

Additionally, US private equity firm KPS Capital Partners agreed to pay £1.4bn for INEOS Composites, a company renowned for its production of plastic composites used in a wide range of applications across global markets.

Meanwhile, there were several North West companies that were prolific deal makers last year.

Lymm-based Kids Planet Day Nurseries concluded a further 22 acquisitions during the year, with its January acquisition of Springfield Day Nurseries and Dragons Camp holiday club representing its entrance to the Welsh market, and its August acquisition of Hollies Day Nurseries taking it past the 200-nurseries mark.

Perspective Financial Group was involved in 20 deals in 2024, making it the second most acquisitive buyer in the North West.

Additionally, optician chain Hakim Group, backed by Seas Capital, boosted its portfolio with a further 19 acquisitions.

In the final quarter of 2024, most industry sectors experienced a resurgence in growth. The professional services sector emerged as the most prolific source of activity throughout the year, recording 264 deals, which marks an 8.6% increase compared with the previous year.

The value in this sector saw a significant rise of 34%, escalating from just over £2bn to £2.7bn.

Stand out deals included the £800m investment in Helsby-based RSK Group by a consortium led by Searchlight Capital Partners and Ares Management, as well as a further five acquisitions.

The wholesale and retail sector returned a 3.5% increase in deal volume, however, it experienced a substantial 75% reduction in overall value.

Manufacturing was the third most active sector, with 210 deals announced, collectively worth £3.9bn. This represented a 7.7% increase in volume, although the sector faced a 54% decline in value.

Notably, the hospitality sector saw the largest surge in deal activity, more than doubling from 29 deals in 2023 to 47 deals in 2024.

The acquisitions of Electricity North West and Calisen contributed to the upturn in volume and value for the utilities sector, with volume up by 42% and value by a staggering 504%.

In 2024, there were 180 transactions that involved a private equity aspect to their funding.

This marked an increase from 151 deals in 2023. Despite this rise, the overall volume of private equity-funded deals remained consistent at 16% of all North West deals, as the market expanded last year.

Venture capital investments accounted for a significant 68% of these deals, up from just under 60% in 2023.

Conversely, buyout activity experienced a seven per cent decline year on year.

The most active investor in the region was the Business Growth Fund, followed by Foresight Group and Maven Capital Partners. Deals funded by bank debt constituted 16% of the total volume, which was double that seen in 2023.

The top provider in this category was alternative lender ThinCats, with 14 deals. Traditional lender HSBC secured second position with 12 deals, while Praetura ranked third with eight transactions.

The report showed that Mills and Reeve was catapulted to the top of the region’s legal advisor rankings, from 13th place last year, ousting previous leader, Addleshaw Goddard, which slipped to fourth placing.

The rest of the top five North West legal advisors were: Napthens Solicitors, which remained in second slot; Hill Dickinson, which moved up from fourth to third; and fifth-placed Brabners, which slipped from third in 2023.

Financial advisor rankings for the North West placed Bolton-based K3 Capital Group in top spot again, with Grant Thornton retaining its second spot, RSM, moving up from fifth to third, Azets, jumping from eighth to fourth and MHA occupying fifth place, compared with ninth last year.

Introducing the 2024 report, Experian MarketIQ research manager, Jane Turner, said: “After a subdued opening, our new figures show a welcome upturn in UK M&A activity in 2024, with stabilising interest rates and lower inflation fuelling an increase in strategic borrowing and deal volume accelerating as the year progressed.

“Businesses pressed hard to finalise transactions ahead of October’s Budget and heightened activity across a wide range of key sectors and metrics culminated in record-breaking deal volume in the final quarter.

“Meanwhile, a surge in high value M&A continued throughout the year, with corporate bidders and private equity sponsors competing for top-tier assets, and we saw a string of public companies taken private in multibillion-pound transactions – along with numerous big ticket strategic deals in the financial services and telecoms space.”

She added: “Investment levels were also on the rise, especially in the UK’s booming technology sector, while on the sell-side, there were pleasing signs of stronger exit activity after a long lull.

“Looking forward, some uncertainties remain, and our initial figures suggest a relatively slow start to 2025.”