Yorkshire deals market review in association with Grant Thornton

Duncan Morpeth.

The plummeting temperatures felt across the region in November did nothing to cool down activity in the Yorkshire deals market. And there’s plenty more activity expected before the close of 2017, according to Duncan Morpeth, associate director in Corporate Finance at Grant Thornton in Yorkshire.

Two of the five most significant deals last month involved software companies, providing yet more evidence of the growing importance of the technology sector to the region’s economy. The £224m take-private of Sheffield-based software firm, Servelec, by Montagu Private Equity was particularly notable as it represented the first take-private of a plc seen in the market for a significant amount of time.

The business has had an interesting journey since its initial IPO four years ago and the 20% premium offered to shareholders by Montagu was enough to secure board recommendation to take the company private. Overall shareholders who invested on the IPO enjoyed a 185% return.

But why did Servelec decide to go private again? According to its directors, “private ownership would allow it to pursue opportunities it would not be able to on the public markets”. Could there be more news to come from the company given that it can now make further decisions and investment without worrying about public marker scrutiny, and the resulting impact on the company share price? Watch this space.

Take-private deals like this one are notoriously difficult to get over the line, due to the lack of certainty of the transaction – especially when there is not a concentrated shareholding – and the costs associated. It will be interesting to see whether this will happen more frequently in 2018, which we may do if the public market undervalues companies across sectors.

The other sizeable software deal in November was the Livingbridge investment into Giacom, the Cloud software business based in Hull, which saw LDC retain a minority stake.

Outside of the technology sector, other standout deals included: Lowell Group’s £640m carve-out acquisition of Lindroff from Intrum Justitia; Pure Gym’s sale to the US investment firm Leonard Green & Partners; and VP Group plc’s £69m transformational acquisition of Brandon Hire.

November also saw the £18m acquisition of Retra, the cosmetics business, by Warpaint plc; the acquisition of Rebmark, the legal software specialist, by Verisk Analytics Inc; the sale of HeatLink to Rothwell Plumbing Services; Rubber Safety’s acquisition of Distinct Disposables; the sale of Ekspan Holdings to RPM International; and the MBO of Beaucare backed by Santander.

As we head towards Christmas, there will be the usual burst of activity as dealmakers race to complete before the year end. Grant Thornton has been delighted to support a number of exciting deals over the course of 2017, and we wish everyone the best of luck getting their final deals over the line.  Here’s to another successful year in 2018.