Foreign Acquirers Fly-In for British Companies
It should come as no surprise that foreign acquirers and investors still find Britain seriously attractive as a destination when searching for great companies to acquire. When it comes to buying businesses the reasons for this are manifold. Not least (as Boris is often quick to point out to Parliament), the fact that the UK has been one the fastest growing economies in the G7, since Q.3 2020.1
As Steve Barry, Senior Client Director at Evolution, comments:
“Even in the face of the current levels of global volatility; the terrible conflict in the Ukraine, COVID19 and all its variants, squeezed manufacturing supply chains and runaway inflation, the demand from international (and home-grown) acquirers for British companies remains strong.”
One example is Evolution’s recent sale of Specific Environments Limited (SEL), a British design and engineering firm serving Life Sciences, Biotech, and Pharmaceutical markets to New York Private Equity firm, ASGARD Partners & Co.
This deal was notable on a number of grounds. Firstly, there was significant levels of interest from both the UK and foreign companies alike and secondly, the company ultimately sold to an astute foreign Private Equity firm, who cited the British company’s specialist design and engineering expertise as a fundamental driver.
This underscores an ongoing trend: last year saw US-based Private Equity firms target the UK specifically, making acquisitions and boosting portfolio companies through the addition of selected bolt-on businesses (a 57% increase in US acquirer to UK target PE deals in the period Sept 2020 to Aug 2021).
The USA is not the only Region to field acquirers with a serious intent to invest in UK markets, as multinational corporations in
Europe and Asia have also sought out strategic acquisitions in Britain. The 2019 sale of Impact Data Solutions Ltd (IDS) is a good example. This British specialist in the design and installation of network infrastructure solutions was sold by the EvolutionCBS team to Sterlite Technologies Limited, an Indian multinational technology company, headquartered in Mumbai.
Business owners and shareholders should seriously contemplate this point. The main takeaway is that Britain continues to offer rich pickings for acquirers and investors alike, predominantly due to the sheer number of robust and profitable companies domiciled in these islands and an appealing regulatory environment.2
A Regional analysis of deals in 2021 clearly highlights what this has meant in real terms for British businesses. For example, PE deal volumes were up 40% in London, to 359 transactions, with the capital representing 45% of all mid-market PE deals. Both the Midlands and North West also registered a significant increase in transactions, with a 54% and 45% uplift in deal volume respectively.3
Mike Whittle, Managing Director of Evolution CBS, comments:
“As far as the future is concerned, business owners and shareholders should be very encouraged. Commentators near and far are quick to highlight the deal momentum that has continued this year from the highs of 2021, with the UK being one of the Regions expected to see the biggest rises in M&A.”4
With this deal momentum set to continue across a diverse range of sectors, including Healthcare, Software Development, Recruitment and others, owners and shareholders should feel positive. For business owners considering a sale in today’s market, the old proverb rings true: a rising tide lifts all boats.
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About EvolutionCBS
EvolutionCBS is a long-established, premium provider of business sale advisory services with an enviable track record of international transactions. We work with the owners of UK businesses in any sector and any region, finding buyers from around the world through highly targeted research and supporting our Clients with dedicated Director-led teams, at every stage of their journey to a successful sale. https://www.evolutioncbs.co.uk
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References:
- UK is fastest growing G7 economy by one measure, and fifth by another. https://fullfact.org/economy/january-2022-gdp-growth-g7/
- Number of British businesses acquired by US private equity firms jumps 57 per cent as US houses look to UK for value: (Private Equity Wire article): https://www.privateequitywire.co.uk/2021/08/23/305227/number-british-businesses-acquired-us-private-equity-firms-jumps-57-cent-us).
- UK Mid-Market PE Review (Perspectives on Private Equity activity in 2021) – KPMG.
- Global M&A Report – 2021 Annual.
