It is undoubtedly a seller’s market and the range of financing options for quality growth businesses continues to multiply. The rise of the debt funds, and the current receptiveness of the public markets for both growth and yield stocks creates additional options for vendors. This is alongside the traditional trade and private equity deal channels. UK assets continue to attract premium prices from overseas trade acquirers despite the uncertainty created by Brexit.
Though economic and political forecasting is challenging, the M&A market performed strongly in 2017. Deal activity eased back slightly, with overall deal volume in the UK down by nearly 10%, though valuations remain strong.
Deal values continued to track upwards, with the aggregate value of closed deals in the UK increasing over 20%. This reflects both a step up in strategic deal making and an increased appetite for mega-deals as the search for organic growth becomes more challenging for businesses. M&A activity was supported by highly liquid debt and equity markets, whilst the speed of technological change ensured that M&A remained high on board agendas.
Conversely investing well is a challenging business. Competition and the availability of alternate sources of capital for deals has kept asset prices high for private equity. This has created excellent exit conditions, but raises the question of what the returns profile will look like for the 2018 vintage of deals.
We had a great year, advising on 188 deals in 2017 worth nearly £6 billion and simultaneously increasing our market share. Our sector and relationship led focus, and international reach, combined with a genuinely integrated approach across all aspects of the deal is resonating in the market.
We are always keen to work with dynamic, growing businesses. If you are contemplating your strategic options for 2018 and beyond, we would be delighted to discuss this with you and share our thoughts. Please feel free to contact Andy Morgan or any other member of the team.