Buy-and-build strategies keep deal activity ticking over

A packed room at TheBusinessDesk.com’s Rainmakers seminar in Leeds, supported by Squire Patton Boggs and Grant Thornton, heard from an expert panel reflecting on the deals market in 2023 and looking forward to what the year ahead might have in store, discussing funding and investment trends, and analysing the impact of technology.

Buy-and-build activity helped to keep deals ticking over in a relatively quiet market, with private equity often looking to support consolidations

“That’s the recurring revenue for a lot of us around this table that kept going reasonably positively,” said Paul Mann, head of UK private equity at Squire Patton Boggs.

“I think for things to really get back cracking, we need some of the areas that have really had a tough time to start coming back to the table on the deal side. But the buy-and-build has kept a lot of us out of mischief for a number of months, certainly in the first half of last year.”

Paul Mann

Dan Rosinke, national head of transaction advisory at Grant Thornton, added: “I think we see a lot of buy and build for some industries and some small businesses because regulation is getting harder and harder.

“Particularly in financial services, we’ve seen a lot of consolidation, by PE or others, in those markets.

“It creates real opportunities for businesses who are consultants in those markets, opportunities that will drive transactions – and also drive the market.”

Andy Lees, managing partner for new business at Palatine, highlighted how the different tiers of private equity can broaden the exit options for business owners.

He said: “They can sit back and say, right, what are my business objectives? What are my personal objectives?

“They have options – do they go and seek early seed capital or growth capital, early-stage private equity? Or do they want to partner with another private-equity backed business, because both of those options can be really attractive.”

Hannah Kirkup

Hannah Kirkup, investment manager at Key Capital Partners, said: “In the past 18 months that I’ve been with Key Capital we’ve seen a lot of cash-out, equity release deals.

“It feels like business owners are looking to de-risk and take cash off the table because they’ve been spooked by everything we’ve talked about over the last couple of years.

“I expect that to continue, because business owners who need to get their businesses to the next level of growth and invest, they want to share that risk. They’re not willing to do it alone. It feels like they really want a partner to take that risk with them and invest alongside, which is perfect for us.”

“In any difficult market there is always opportunity,” said Mel Hird, founder and director of Fresh Thinking Capital. “The businesses that are overleveraged, there are great opportunities to acquire and do things creatively.

“It’s down to advisors to bring people on a journey and give them the confidence. We could wait forever for these things, but the truth is, this is all you have. And we’re here for you to speak to the right people at the right time.”

Join us for the Rainmakers Conference 2024 in Manchester on 20 March, which will bring together funders, entrepreneurs, and business leaders to focus on opportunities and challenges of building a dynamic and competitive economy in the North. Find out more and book your tickets at www.rainmakersconference.co.uk.