Manchester-based business advisory firm MHA Moore and Smalley has predicted record deal activity for next year’s first quarter.
The firm, which also has offices in Liverpool, Blackpool and Kendal, said it has advised on £200m in deals this year and says appetite for business owners to do deals will “remain strong” next year.
Andrew Feeke, head of corporate finance at Manchester-based accountancy and business advisory firm MHA Moore and Smalley, said he believes there could be record deals between January 1 and April 5, which he puts down to a combination of changes to the capital gains tax regime and strong liquidity among funders.
He said: “We mustn’t forget that this has been a very challenging time for many people and communities, as well as for businesses and their owners.
“At the same time, it’s also been encouraging to see many businesses are still growing, creating jobs, and attracting investment.
“Our deal activity has remained strong throughout the pandemic period with our team kept busy on deals spanning different sectors, including cross border deals.
“Many of the legal advisors and private equity contacts I speak to are witnessing a recent increase in activity levels.”
This year has seen the firm advise on deals including the acquisition of Greater Manchester-based Lone Worker Solutions by Belfast-based Totalmobile, Manchester-based Tristone Healthcare’s acquisition of Southampton-based Sportfit Support Services, the management buyout (MBO) of Lancashire-based automotive parts manufacturer Bailcast and the family MBO of Greater Manchester-based civil engineering specialist J Hopkins.
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The firm is looking at “a lot” of MBO activity and Employee Ownership Trust transactions, he says, as “owners, particularly those with cash on the balance sheet, look to accelerate transactions to realise value from the business before any potential changes come in”.
“With CBILS support ongoing, we should also see plenty of liquidity remaining in the market into the early part of next year.”
However, he said there may be a “pregnant pause” in transactions after the first quarter, coinciding with funders reviewing the market and their balance sheets and “perhaps assessing where they may be overexposed and reviewing their target sectors”.
Andrew said he predicts strong appetite from private equity funders will remain for businesses in the tech and healthcare sectors.
“Both prior to and throughout the pandemic we’ve seen an ever-increasing drive towards business models that offer software as a service, with long-term secured recurring revenues driving higher multiples.
“Those tech firms that are serving the healthcare sector are very sought after, with the health sector showing consistent growth and limited exposure to negative market factors.
“With the rapid adoption of digital technologies across the public spectrum, I also predict an increasing amount of expansion and consolidation in the digital and creative sector as corporates pivot their marketing channels from ‘traditional’ to digital.”