Deal market set to pick up after difficult year
THE North’s mergers and acquisitions (M&A) market had a difficult year in 2009 with fewer transactions overall and many driven as a result of distressed situations.
According to a new study conducted by accountants PKF deal values for the UK as a whole in the first quarter were down to £13bn.
In the second quarter this slipped further to £8.3bn. However, in the final quarter values were back up at a healthy £48.2bn. The total deal value for the year was £80bn.
Deal flow across the North was mostly driven by privately owned SMEs with the majority of M&A activity in the £10m and below category.
Mark Lister, PKF’s head of corporate finance in the North and a partner in the Leeds office, said: “One of the main problems in 2009 was that although there were interested buyers across the North, many of the distressed players in the market entered into pre-packaged receiverships almost immediately.
“This left buyers with few visible opportunities and it is something which I hope will change over the course of 2010.”
He said despite the difficulties there were deals being completed and in Yorkshire PKF had advised on the bank refinancing of Glisten and fund-raising for Crompton Controls and Crompton Mouldings in the second half of the year.
Mr Lister added: “Although the market is generally quiet, there are signs that activity is picking up. The financing environment is significantly more stable than this time last year and there is more clarity in the market.
“However, I would like to see banks looking at funding more from a long term perspective as opposed to the short-termism we tend to see.”
He continued: “I also expect to see a small window of opportunity to open for IPOs in the first quarter of 2010 however the outcome of the election may change this from the second quarter on.”
On a sector front in the North West and Yorkshire those to keep an eye on continue to be renewable energy, food and financial services.
The deal maker report also found that the top 10 deals table over the course of 2009 were dominated by bail-out transactions.
HM Treasury paid £5.3bn for a 29.79% stake in Royal Bank of Scotland (RBS) in January and invested a further £25bn towards the end of year which made this the largest deal of 2009.
