Last year was busy – What does next year have in store?

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.

Sale of Cambridge Bioscience and Research Donors to Nordic BioSite Group


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.

Sale of X-On to SOuthern Communications Group

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

Crystal ball
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:

  1. 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.
  2. 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!
  3. 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.
  4. 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.
  5. 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.


Planning to sell your company this year, or just grooming for a later sale? Thinking about a retirement and considering sellling to your management team. In any event I guess you'd rather pay as little of the proceeds in tax as possible. We are once again running our Business Exit Strategy Seminars which cover these topics and more in a lively informative way. "A morning well spent...." is a typical quote from a previous attendee. The event is running in Peterborough and Norwich over the next few weeks, then in Cambridge and London in June. Full program and booking details on events page.

Are the banks open for business - lending to SMEs

The Institute of Chartered Accoutants of Scotland recently put together a response to the UK government on the availability of bank fuding for SMEs.    This contains quite a few interesting points, but I was particularly taken on the point about communication.  The banks all say the are "open for business".  And indeed they are - but they're less good at communicating to the SME community what constitutes good, or even tolerably bankable opportunities.  The following quote from the report encapsulates it neatly.


"If the lending landscape has changed and those businesses that see themselves as “viable” have in fact been “downgraded” by the banks to below that line – there must be clear and concise public communication by the banks to let businesses and their advisors know what the playing field is – never mind having it level.

I hope this does not degenerate into the banks looking upon this as “competitive advantage” territory and thus reluctant and/or unwilling to make public what they consider to be “viable” – this will not help and may lead to another “bank-bashing” session – which will also not help.

Banks need to make sure that their staff – from those who are initially contacted to the ultimate decision makers – are well versed in what they are looking for from those SME businesses that approach it for funding. They also must ensure that they apply those principles on a fair and consistent basis."

This explains some of our recent experiences in funding management buyouts and M&A transactions.    We have found that banks have variously changed their criteria for the size of transaction they'll look at for a cash flow loan to support and MBO.   Also many have quite a different outlook for a potential borrower that  is "new to bank".   And its not enough to have a long standing relationship.   One major UK bank which shall remain nameless (clue dark equine logo on a blue and green background) normally known for being particularly good  at supporting its existing customers turned down such an opportunity pretty brusquely.  The reason was actually scale - but the way it was "rejected" has probably lost it the relationship whatever the outcome of the MBO and quite unneccesarily so.


Bright spots in a flat M&A Market?

M&A activity is at historically low levels. Thomson Reuters reports worldwide M&A value only slightly above that of 2004 during the recovery from the dot-com implosion. At a UK level Corpfin observed August 2010 volumes 20% below the previous month, and 20% down on August 2009. The fall is greater locally - East Anglia Q3 deal volume was down more than 50% over Q2 and nearly 50% down from Q3 2009. The local trend has been a down turn since Q2 of 2008, with a small rise at the beginning of 2010.


A financial storm of unprecedented magnitude has changed the landscape and toughed up the corporate survivors. But there are signs of opportunities amongst the wreckage. Many businesses have stress-tested their business model and they’ve survived or prospered, creating an opportune time to sell or expand by acquisition. To survive the crisis, companies rapidly reduced stockholdings and cut deep. This didn’t work for all. Some companies failed. Now with competitors removed the survivors enjoy a stronger competitive position. Moreover, buyers with access to cash face a possibly generational opportunity to make strategic acquisitions. There are plenty of targets out there who have reason to sell. Business owners often exit for personal and practical reasons other than maximising value - retirement, health, succession, or the need to make their business part of a large entity to fulfil its potential.


There is a huge build up of resources with which to do deals. The 1,000 biggest companies by market value worldwide have amassed $2.87 trillion in cash and equivalents based on their latest filings according to Bloomberg. Combine this with record low borrowing costs and realistically priced targets and you have a much better climate for deal making – whether you are buying or selling. So if you’ve survived the stress-testing this could be a good time to consider buying or planning your exit.


The prognosis for big business trickles down to a regional level as borne out by our recent experience at PEM Corporate Finance. We have advised on five buy-side deals this year, the MBO of Molecular Dimensions along with the MBO of a document management business, the acquisition of Cammetrics by Xennia, and two further acquisitions in manufacturing and distribution. The trend to cash funded acquisitions is illustrated by Corpfin reporting 53% of all deals to be acquisitions, 63% of which were funded by cash.


Through the recession many business owners have delayed plans for a sale of their business. But it is imperative to have a decent exit strategy and to groom the business to maximise value as the market recovers. Failure to do so will mean that a business is less attractive to potential buyers and will fetch a lower price. The same issues apply if instead of outright sale one is considering putting succession in place through a sale or partial sale in a management buyout. A decent exit strategy or succession plan will consider the personal and corporate objectives of the owner’s current business valuation; the valuation at which the owners would be prepared to sell; business prospects; what drives value in the business; potential types of buyer; how must the business look to maximise sale value; and what could get in the way of an exit or reduce future value.

We are running Business Exit Strategies Seminars to help business owners formulate exit plans and groom their companies for an eventual sale or succession transaction. This continues to be a key issue for company owners. The events are running in November in Hemel Hempstead, Northampton and Brentwood.   Call Hannah on 01223 728280 or email [email protected] if you'd like to book.

More Potential Buyers than Willing Sellers - M&A Activity set to increase in 2010

Can one plus one ever equal three?  Yes it can.  If you are selling your business - find a strategic buyer which will enjoy synergies from combining the businesses and which knows it is in competition to buy and you can maximise value and share in the marriage value. 

One plus one equals three What are the chances of pulling this off in the current climate?  Most recent surveys of corporate opinion show that firms are far more likely to engage in M&A activity over the coming year.  E&Y found 57% were more likely to make an acquisition while within BDO’s rather more “gung-ho” sample 80% felt the same.  Regardless of numbers it’s quite clear that there is a much greater appetite for deals this year.

Deals will be concluded by strong businesses with clear strategic intent, although some of those surveyed did admit to opportunism as a motivator and to being on the look out for bargains.  The biggest hurdle is likely to be discrepancies between buyer and seller valuation expectations – however as the market improves, and the volume of transactions increases, this is likely to even out.

There is evidence that strategic acquirers who have been deferring M&A activity while profitability recovers are now sitting on their largest cash reserves in recent years.  Add to this Private Equity investors who also have cash to burn before the time expiry of funds with a finite end date and you have a much better prognosis for those seeking to sell their business than for many months.  The return of strategic buyers and increased competition should drive an increase in activity and valuations.

The ability of purchasers to fund deals from their own cash resources is still a key factor – for example Corpfin found that the majority of UK deals in April 2010 were funded by buyers existing cash resources.  However they also found that the second largest source of funding for such deals was bank debt.  So liquidity is once again available for the right deals.

Owner managers who have been planning an exit but have had to put their plans on hold during the financial crisis can now start planning for exit.  Now is the time to consider grooming the business for sale in the short or medium term.  Now is the time to give consideration to the preparation of an exit strategy – which should cover the following issues:

· What are the personal or corporate objectives of the owners?

· What’s the business worth now?

· At what valuation would the owners be prepared to sell?

· What are the prospects for the business?

· What drives value in the business?

· What will a likely potential buyer for the business look like?

· How must the business look to maximise sale value in the future?

· What could get in the way of an exit or reduce future value?

At PEM Corporate Finance we have seen a marked increase in the number of enquiries from businesses planning for exit.  And there is also plenty of appetite from local businesses to make acquisitions – we have recently advised the purchaser in transactions such as the purchase of ISIS Fertility by Bourn Hall Clinic, the acquisition of Elmy Landscapes by Flora-tec and the MBO from Stratech Scientific of Molecular Dimensions.   

If you are exit planning it’s worth getting an outside opinion on the valuation of the business, and on opportunities to groom it in order to increase exit value.  Grooming is aimed at closing the gap between the current value of the business and the target exit valuation.  It should avoid the risk of a sale at undervalue.

Management Buyout at Molecular Dimensions

Another deal to announce. We have recently helped Tony Savill, CEO of Suffolk based Molecular Dimensions, to acquired the business through an amicable management buyout from existing shareholders.

Molecular Dimensions is a world leading supplier of modern screens, reagents, other consumables and instrumentation for protein structure determination by X-ray crystallography.  Headquartered in Newmarket it has offices in the USA and distribution in Asia.  Founded in 1998 to provide specialist products for crystallographers across the world, it has grown through alliances with leading scientists aimed at developing and commercializing innovative ideas.  Current alliances include the MRC Laboratory of Molecular Biology Cambridge, Imperial College London, and the York Structural Biology Laboratory, University of York.

Molecular-dimensions-mbo-compressed Molecular Dimensions offers the most innovative range of products from the latest developments in structural biology research.  The company currently has over 20 projects at various stages of development from new screens and reagents for crystal growth, new laboratory plastic-ware, to a range of instrumentation through an exclusive collaboration with a spin-off company from a German university.  The company has launched two unique products already this year; one for screening temperature as a crystal growth parameter, and a new device for growing crystals and analyzing them ‘in-situ’ in capillaries.

Tony has been MD of the business since its formation as an associated company ofStratech Scientific Limited.   Stratech, which was founded over 26 years ago, is a distributor of innovative and specialist life science research tools and  supplies one of the largest ranges of primary and secondary antibodies.  The management buyout of Molecular Dimensions follows a strategic review and should allow both businesses to grow through greater focus on their respective different markets.

As is often the case following a buyout an independent Molecular Dimensions will benefit from increased market focus.  It is also good to see bank funding once more becoming available for such transactions”. 

Legal advice to the buyout team was provided by Claire Clarke and Stephen Hamilton at Mills & Reeve in Cambridge.    Finance for the transaction was arranged by Steve Cooper of HSBC Cambridge’s technology team.

Guarded Optimism

I don't think that we are alone amongst corporate finance advisers in seeing a better flow of enquiries since the last quarter of 2009.   What drove this?  Probably that existence of slightly more liquidity in the system, slightly better economic news , but above all recovering business confidence. 

Business confidence ICAEW Q12010 The  Institute of Chartered Accountants in England and Wales ICAEW publishes a business confidence monitor.    This clearly shows confidence on the slide before the recession hit - but the graph finally turned positive in Q4 of 2009.    Pretty much at the same time as interest in m&a began to recover.

This makes sense as the decision to sell your company, to invest hard earned cash in a management buyout, or to buy a business needs one to have a reasonably positive view of the future.

Mergermarketq42009The data from MergerMarket also supports this with a slight upturn in volumes after a long decline from a Q2 2008 peak.    Quite an interesting graph which shows the rot setting in with Lehman's, a last mini peak just before the change of capital gains tax rules, and then a steep fall until Q4 of last year.  

If things stay positive, and the politicians don't  mess it up - big assumption I know - then I would expect the deal volume curve to continue to creep upwards.    For example our intake of assignments since Q4 2009 and Q1 2010 will take a few months to reach fruition.

Company sales can take between 3 and 12 months to complete - and the general experience at the moment is that transactions are taking longer to close then pre recession - buyers are being more careful, conducting longer and more detailed due diligence for example.   Similarly while management buyouts can be swift - we have one about to complete that has been running for more than a year.

For owner managed businesses there is also some comfort to be taken from the fact that the fall off inMergermarket volume to 2009 deal volumes has been proportionately less pronounced than at the mega deal end of the spectrum.  

 The chart - again from MergerMarket shows that deals in the €250 to €500M range were down to only 35% of their peak levels by the second half of 2009, deals in the €5 to €15M range were at 45% of their peak level but those with value undisclosed (which in reality includes many of the "local" or owner managed business transactions) were at 65% of their peak numbers.

Its hard not to resort to overworked cliches but one might sum all this up - as did MergerMarket as "tender green shoots".   Given all the macro economic concerns guarded optimism might be better.

With all this in mind we are running a series of seminars entitled Business Exit Strategies.  

These are lively and informative and cover Selling your Business, Managing Succession, Management Buyouts, Mitigating Tax, Grooming, and Exit Strategy.   

Invite cropThis spring we are running events in Norwich, Peterborough, Cambridge and London.   For more details including brochure, full program and information on how to book please have a look at our website events pages. 


Time to come out of hibernation?

Last year was a difficult year for M&A worldwide – with many advisers downsizing significantly and going into “hibernation”.  Thomson Reuters reported European M&A down 65% from the peak.  Meanwhile, in a sign of the times, Mergermarket reported a 370% increase in insolvency deals to a level just short of the quantum done over the previous four years.

So is it time to come out of hibernation?  What is this year going to be like?  The government tell us we have come out of recession.  But then in a recent Harris poll just 10% of people said they believed government figures.  So who to believe?

At a local level in East Anglia we are already seeing some signs of life in the market.  PEM Corporate Finance has recently completed two transactions – the acquisition of ISIS Fertility by Bourn Hall and the acquisition of Elmy Landscapes by Flora-tec.

The acquisition of Colchester based ISIS gives Cambridge based Bourn Hall greater ability to provide its world class fertility treatment services to patients in Essex and Suffolk.  Cambridge based Flora-tec’s acquisition of Ipswich based Elmy gives it greater coverage in Suffolk and the east of the region.  It also gives it the ability to leverage Elmy’s particular expertise in the maintenance of school and sports-grounds.  Interestingly both Bourn Hall and Flora-tec were management buyouts and are making their first acquisitions post buyout.  These are excellent growth opportunities for our clients, and show that there are deals to be done where there is a good strategic fit.  Since completing these transactions we have seen a pronounced upturn in new instructions and enquiries.

This upturn is being driven by some recovery in the multiples being paid for businesses, slightly better liquidity available from the banks, and above all by a gradual return of confidence.   But despite increased confidence entrepreneurs feel it will be a slow upturn.  A recent Bowmark Capital survey found that just 14% foresaw recovery in the first half of 2010, 45% in the second half of this year, and 26% felt it would take until the first half of 2011.

One symptom of the recession last year was the very slow pace at which transactions progressed.  Now, for those able to do a quick deal, the prospect of realising value before a change of government and a much predicted change in the tax regime, is putting some welcome pace behind transactions.

Another feature of the coming year will probably be a greater proportion of trade buyers to private equity buyers than of late.  Trade buyers making strategic acquisitions should benefit from operational synergies.  However Private Equity buyers will neither benefit from synergies nor be able to raise the high level of bank debt that used to allow them to leverage their deals.

Technology deals have been hit during recession, with one commentator reporting the North American market at a 15 year low.  The same commentator now forecasts a doubling of activity in 2010.  Pricing is improving in the tech market too – Regent Associates report a steady increase in multiples paid for technology business since Q2 of 2009.  This was probably the low point due to the high level of distressed sales then being conducted at knock down prices.

So overall the picture is more positive than it was.  But one should be cautious about forecasting.  As American economist Paul Samuelson said, “the stock market has forecast nine of the last five recessions”.  Just as dangerous to be over optimistic – but increasing confidence should be self fulfilling provided there are no more shocks to the system.  

Don't mention green shoots...........

We've recently completed another transaction - the acquisition by Cambridge based Flora-tec of Suffolk based Elmy Landscapes .

Flora-tec-cropped Flora-tec is one of the UK’s leading corporate horticulture companies - essentially is supplies and maintains any plants that a corporate might require.    It is based in Cambridge and it operates throughout the UK from branches in Ware, Esher, Birmingham, Chester & Leeds.   Customers include Hand Picked Hotels, Sharp, Fujitsu, Roche and The Audit Commission.
Flora-tec was formerly part of Cambridge based Unwins, and was the subject of a management buy-out led by Andy Bradley in 2007.

Elmy was founded in 2000 and its focus is the provision of grounds maintenance and landscape services with particular expertise in looking after school and sports-grounds.  Its clients include Colchester Borough Council, Carillion and Suffolk County Council.   Elmy has recently won the contract to provide landscape maintenance to the new Cambridgeshire guided Busway (assuming its every completed).   Peter Elmy is going to be a consultant.

Helen Drayton at Hewitsonsin Cambridge did the legal work for Flora-tec.

I'm always impressed at the deep well of cliches and familiar phrases that the press have a their finger tips when covering transactions - so I was half expecting headlines along the lines of "green shoots of recovery" for this one.    Given the fragility of the recovery I think that'd be tempting fate.   Full marks then to Tony Quested of Business Weekly,  for "Plant firm branches out with acquisition"!  Runner up prizes to Business in East Angliafor "New year deal flower at Flora-tec"  and Horticulture week'smore prosaic "Elmy Landscapes bought by Flora-tec"

Interestingly - and entirely coincidently - both this deal and the Bourn Hall acquisition of ISISI posted about recently involved management buyouts which had prospered post buyout and moved on to making their first acquisition.  Not only that both deals involved companies in Cambridgeshire acquiring businesses in Suffolk. More details of both transactions on our website.

M&A Bourn Hall buys ISIS Fertility

I'm pleased to be able to report on a transaction we recently closed.  It is particularly nice to be able to work on a second deal with the same group of people - doesn't always happen in M&A if you are acting for the sellers for example.    We advised the management of Bourn Hall, led byMike Macnamee on the original MBO from its Swiss pharmaceutical parent company Serono, and this time around on the acquisition of ISIS Fertility in Colchester.

Bourn Hall Clinic, the world’s first and best-known assisted conception clinic, was established in 1980 by IVF pioneers Patrick Steptoe and Robert Edwards.  It remains one of the UK’s leading fertility clinics.  In ISIS Fertility was established in Colchester in 1999 to provide fertility treatment for patients in Essex and South Suffolk.  Following the deal it will become Bourn Hall Clinic Colchester. 

The Colchester clinic will provide a full fertility service including all treatments up to and including embryo-transfer, and is the first fully owned satellite clinic to be established by Bourn Hall. It will treat both private and NHS funded patients.

Neil Burton at Mills & Reevein Cambridge provided legal advice to Bourn Hall.

Managing Succession - The Seven Biggest Fallacies

The Six Biggest Fallacies about Succession Planning

I meet lots of business people who want to talk about putting in place an Exit Strategy, and planning for this as well as grooming their companies for value growth prior to exit.   Surprisingly its less common to find folk prepared to talk about succession.  

Why don’t people like to talk about succession – here’s some understandable reasons.

  • Its not a crisis yet so let’s defer it.
  • I don’t have a suitable successor – so I don’t feel I can retire
  • I don’t have any obvious and outstandingly good candidates – how can I chose – better to wait until I find a suitable candidate
  • How do I get paid out?
  • It’s the wrong time to sell – so I’ll wait till things improve

But its important – like death and taxes the need for succession won’t go away.   So here are some things not to do – or the six biggest fallacies about succession planning.   Listen carefully – you may here some of these in the corridors of your company.

 What this place needs is more people like me”  Leaders who hire or promote in their own self-image run the risk of creating a band of “Mini-me’s” rather than a well-balanced team in which the challenges of one member are balanced by the strengths of another.  Good leaders surround themselves with individuals who have complementary skills and strengths.

What this place needs is new blood” – Bringing in new people may “shake things up” but it can also de-motivate the individuals who have been contributing for years by robbing them of their opportunity to shine.  Before adding “new blood” to the team, assess the skills and potential of existing employees – the company’s next CEO may be languishing in another role.

Managing ‘things’ qualifies you to manage people” – Promoting the best functional specialists without assessing and strengthening their management skills can be a recipe for disaster.  Make sure you have a process to identify which of these performers have the potential to be effective people managers.

“Let’s keep this to ourselves” – Identifying high potential candidates for future leadership roles is the first step, but not letting them know about it is a mistake.   You run the risk of losing top performers to a competitive job market, but you also miss a valuable opportunity for development.

Seminar Invite front cover Nov 09 “Everyone wants to be a senior exec” – Not all managers want to face the stress of a leadership role. But these same managers can be a big asset to an organization.

“Blood is thicker than water” – Just because a son or daughter is in line to take over the family business doesn’t mean they’re qualified to be an effective leader. Call it the third generation curse but only 24% of UK Family Businesses survive as such through to the second generation and only 14% make it beyond the third generation.


So start planning now, whether your business exit options are through a trade sale, or through a management buyout, you will need to have a plan for succession in management as well as succession of ownership.    To address these issues we are running an updated version of our Business Exit Strategies Seminars.    They will also cover tax mitigation, management buyouts, grooming, and selling  your business.   The events are practically focused with interactive sessions, and are aimed squarely at business owners.   This time around we are holding them in Hemel Hempstead, Milton Keynes and Brentwood.  Have a look at our events page for more details.

With acknowledgment to John Szold of