It’s been a long time since I posted here.
It’s been a busy year and we’ve been busy advising on some interesting transactions. Here are some of the highlights
Sale of Young Calibration to NMi Certain BV.
Another sale to an overseas buyer. Young Calibration is based on the South coast near Brighton. And this was a first for me in that the whole transaction was conducted virtually. I’ve done deals substantially virtually, but in this case right from first meeting with the selling shareholder Adrian Young to the complete everything took place in Teams or Zoom. Young Calibration has UKAS accredited labs and industry leading knowledge and experience in thermal fluid systems testing, cleaning and development. It works with a wide spectrum of industry sectors including automotive, aviation, medical, environmental, and pharmaceuticals. The deal is strategic for NMi and should allow the companies to capitalise on opportunities in electric vehicles charging, and respond to new regulations in automotive and motorsport sectors.
MBO of Titan
Titan is a St Neots based engineering company. It began in motorsport racing and having changed and broadened over the years is now at the forefront of manufacturing complex steering technologies for advanced vehicles. This was an MBO lead by an experienced team who bought the business from its private shareholders. These shareholders had had the foresight to bring in a professional management team to develop and grow the business, and it’s great to see that coming to fruition in a good exit for them, and a great opportunity for CEO George Lendrum and his team to continue to grow the business.
This deal sees three European life science distribution businesses coming together. NMI’s plans to assemble a pan-European life science research distributor took a big step forward with thee acquisitor gives them an entre into the market for high quality bio specimens. Another international deal, and another conducted virtually. I have at least met Mike Kerins the CEO since the deal was done over a glass of Champagne.
Last but not least, completing within a couple of weeks of our firm’s financial year end we advised on the sale of X-On a cloud telephony business focussed on the UK primary care sector. Approximately 11 million GP patients in the UK are now served by 1,400 GP practices using X-On’s Surgery Connect. This is about 17.5% of the telephony market in primary care. X-On was sold to Southern Communications Group and it should allow X-On to further capitalise on demand for its market leading product. Again, a deal conducted largely virtually, but I had met CEO Paul Bensley and his co-Director Paul Heeren before the process kicked off.
What themes can one draw out from the last year. Increased digitisaion of deal doing – which is oiling the wheels. And that there’s plenty of activity still. That strategic buyers and PE funds are still very active and there’s plenty of liquidity in the market. From what I can see so far, it’s continuing into 2022/2023
What does the crystal ball say about M&A in 2022 going into 2023
This last section is an edited version of an article I wrote for Business in East Anglia
Deal volume has held up well despite Brexit, and even global pandemic. So how about the dual impacts of war and inflation? Maybe better than you’d expect. A recent Deloitte survey (admittedly done before Putin’s tanks started moving) found that 92% of businesses expected deal volume to increase. Many owner managers are ready to sell because their businesses are doing well and yet after some difficult years they now feel they’d rather do something else and buyers are paying good prices as they have the means and the motive.
Here’s some 5 drivers of activity we’d expect to see:
- The private equity sector has record levels of cash which needs spending. This is driving activity and supporting prices, whether PE funds are buying directly or supporting their existing portfolio to buy. I don’t see this lessening, and with the turmoil in the quoted market, and lack of returns to be made elsewhere I can see investors continuing to pile into Private Equity as an asset category.
- Deal making digitisation is increasing as the examples above show. This allows us to be more agile and to reach further from base to advise businesses – so if whether you’re based in Cornwall or Caithness I'd love to hear from you!
- Cross Border M&A is a strong driver with well funded overseas buyers finding the UK an attractive place to do business. As illustrated by the Cambridge Bioscience and Young Calibration deals above.
- The war for talent there’s been much talk about “the great resignation”, and we’re already seeing deals being done where the acquisition of a good team is the main driver. Expect to see more acquihires – acquisitions driven primarily by the desire to get hold of a team of people - particularly of knowledge led businesses such as consultants, agencies, and professional firms.
- Hot spot sectors driving activity - Tech deals remain buoyant– COVID led to an acceleration of the transformation of many areas of commerce to harness cloud based technologies. Healthcare also a hot spot, our recent deals underscore this trend. We’re also seeing a lot of activity in Fintech particularly around London.