The latest set of figures from Experian MarketIQ show the total value of the UK’s mergers and acquisitions market was on the up in the first quarter of 2018 even as the overall number of deals receded.
Bucking that trend PKF Francis Clark retained their top position as the most active dealmaker in the South West financial adviser table with eight transactions, compared to six in the same quarter last year.
In the UK there were just 1,423 deals announced in Q1, a decline of 26% from the 1,910 transactions recorded during the first quarter of 2017. This was the slowest start to a year since 2013. In the South West the national trend was intensified with 80 M&A and ECM transactions announced in the region so far this year, a decline of almost 50% on the 157 deals recorded during Q1 2017. The report does however highlight that Q1 deals in particular are often reported some time after their completion date, and anticipates that the figure will rise following publication of the report.
The South West saw deal values increasing compared to the last quarter of 2017 (up by 2.7%) but the comparison to Q1 2017 is substantially worse with a 71% decline, from £2.3bn to £683m. In comparison, since the beginning of 2014, the average quarterly value of South West deals is £1.8bn. South West deals accounted for 5.6% and 1% of the overall UK’s volumes and values, respectively.
The report highlights a change of industry focus for the South West, with manufacturing dropping to second position behind professional services with 44% of the transactions; in total 35 deals worth £346m. The values of transactions in the manufacturing sector remained strong despite the drop in volumes, with a total value of £360m for the quarter.
Andrew Killick, Head of Corporate Finance at PKF Francis Clark said:
“Having had an extremely busy year in 2017, its pleasing to see that despite increased market uncertainty our Corporate Finance team continues to carry out a market-leading number of transactions helping entrepreneurs and business owners achieve their aspirations. We have expanded the team with two new joiners and our Energy and Sustainability team have successfully completed a series of debt and equity finance raises in addition to multiple corporate sales.
“The market is showing signs of a divergence of confidence with some Funders showing more caution, whereas certain entrepreneurs are taking a more bullish approach and making the most of the wide availability of low- cost money and progressing with acquisition plans.
“Political uncertainty is also influencing deal structuring and our Transactional Tax team is being kept extremely busy helping clients benefit from the current attractive tax regime. This means that funds can be extracted at a 10% tax rate while allowing them to maintain an interest in their business that would have had to be sold or have seen their capital tied up with funds being extracted at 38% or 45% after tax.”