Deals Review of the Year

CREATIVITY in dealmaking will again be at a premium in 2013, according to a sector specialist.

Andy Kay, corporate finance director at the Midlands office of accountants and advisers Crowe Clark Whitehill, said that some groups with cash are now “actively seeking acquisitions as a key part of strategic growth”.

But he cautioned: “It will still be a difficult market and the need to be creative in dealmaking will remain.”

Kay suggests that buyers will include well-funded corporates with cash, private equity with swollen funds; turnaround specialists and trade interest from overseas, particularly the Far East and the United States.

“There will be broadly no change on prices,” he predicted, “Albeit there will still be a healthy premium for acquisitions that make a strategic difference.”

Which would suggest that the trends we have seen in the Midlands deals market this year are set to continue.

We have seen some excellent deals completed this year but advisers have had to work hard to get transactions across the line and multi-adviser transactions were commonplace as were out of region deals advised locally.

Our Deal of the Month for January was a good illustration of this.

Cobbetts, Cooper Parry Corporate Finance and Translink Corporate Finance advised on a transaction which saw Forum Products Holdings acquired by Barentz Europe.

The deal means Netherlands-based Barentz can now expand its presence in the UK market and capitalise on Forum Products’ strong life science ingredient distributor position in the pharmaceutical, food and animal nutrition markets. Forum Products recorded revenues of £85m in 2011.

In February our Deal of the Month was unsurprisingly, the headline grabbing reintegration of two well-known recruitment groups.

A whole host of Midlands advisers worked on the deal which saw Pertemps and AIM-listed Network Group reintegrated following the announcement of a planned management buy-out of both businesses by a joint management team.

The MBO brings Pertemps and Network back together after Network originally split from Pertemps in 2004 to form a separate listed business comprising 24 operating subsidiaries.

In March our selection was again clear cut. It wasthe transaction that saw the Business Growth Fund (BGF) taking a stake in Wolverhampton toy company Wow! Stuff.

Not only was it the first West Midlands investment by the BGF – established to help Britain’s fast-growing smaller and medium sized businesses – but it related to a fast-growing and exciting local company and the deal involved a raft of local advisers.

The BGF invested £4.8m for a minority stake in the toy company Wow! Stuff which is behind toys such as Air Swimmers.

It was introduced to Wow! Stuff by Birmingham’s Springboard Corporate Finance.

In April our Deal of the Month ticked a lot of boxes for our judges. It demonstrated a Midlands plc’s international ambitions and highlighted the skills of the local advisory community and the funding capacity of a banking collective.

Staffordshire-based veterinary products supplier Dechra Pharmaceuticals expanded in a big way at the start of the month with the £112.5m acquisition of Dutch firm Eurovet Animal Health.

The deal was heavily advised out of Birmingahm and showcased the city’s professional services sector.

Charles Cook, of law firm DLA Piper’s Midlands office in Birmingham, was lead partner on the deal.Investec Investment Banking was financial adviser and broker with KPMG the reporting accountant.

The Birmingham-based banking syndicate comprised Lloyds, Barclays, HSBC and Handelsbanken.

In May the Deal of the Month demonstrated both the industriousness of local advisers and the appetite for private equity firms to back well run local businesses.

Wednesbury’s Purity Soft Drinks – founded more than 100 years ago – was acquired by Langholm Capital, the consumer sector mid-market private equity firm, as part of a management buy-in transaction which saw Garry Nield appointed at the new CEO.

Hawkins Hatton, the Dudley-based law firm, provided lead advice to the Purity Soft Drinks’ family shareholders.

June’s Deal of the Month was the acquisition of public transport infrastructure group Trueform Engineering.

GIL Investments, an associate of West Midlands industrial conglomerate Grove Industries, led and backed the transaction – its first such deal since the untimely death of the firm’s founder David Grove.

Gateley and RSM Tenon were amongst the advisers involved in the deal.

July’s choice was the latest example of global firms buying up niche businesses.
Birmingham manufacturer Precision Micro was acquired by Meggitt plc for an undisclosed sum.

There was no need for introductions as Meggitt is an existing customer of the Erdington specialist component manufacturer which employs more than 150 people.

Birmingham-based Clearwater Corporate Finance advised Precision Micro on the deal while a team from the Birmingham offices of Eversheds provided legal advice.

Our Deal of the Month for August was accountancy firm Dains’ takeover of the Stoke-on-Trent operation of fellow accountant RSM Tenon.

It acquired the accountancy business and staff for an undisclosed amount and was advised by Graham Muth and Nick Dawson from law firm Cobbetts and Paul Roberts of Keelys.

In September we selected the management buyout of a niche holiday operator.
Private equity firm LDC supported the deal for Forest Holidays, which specialises in exclusive rural holiday accommodation. No figure was put on the deal but it was estimated to be more than £20m.

The MBO allowed existing shareholder The Camping and Caravanning Club to fully exit the business, while the Forestry Commission retained a significant shareholding.

Deloitte and Pinsent Masons were amongst the advisers involved in the deal.

In October our Deal of the Month was the takeover of Burton-on-Trent’s LH Group by US firm Wabtec.

Birmingham-based Catalyst Corporate Finance advised the shareholders of LH Group on the deal which will result in Wabtec becoming a comprehensive, full-service provider to the UK rail industry.

November’s choice was a Warwickshire engineering business that changed hands in a multi-million pound management buy-out, funded and advised out of the Midlands.

The Engineering Technology Group supplies high specification machine tools and fixtures and provides engineering services to companies in the automotive, aerospace, and other specialist manufacturing sectors.

The MBO was funded by Santander Corporate Banking in Birmingham and again a wealth of local advisers was involved in the deal.

Simon Chapman, of Burgis & Bullock Corporate Finance, was lead advisor to management and structured the MBO transaction. Rick Smyth, of The Wilkes Partnership, Birmingham, advised the management team and Robert Lee, of Wright Hassall in Leamington advised the vendor. David Doogan, of SGH Martineau, advised Santander.

Our Deal of the Month for December 2012 will be announced next week.