Opportunities for M&A
While private equity buyers are proceeding cautiously, and the bar remains high, there is appetite to deploy capital and invest across the cycle from many funds, particularly for bolt-on opportunities for existing platform investments.
Notwithstanding the practical challenges of completing due diligence across borders, international trade acquirers remain active and interested in UK assets.
UK corporates are increasingly focusing on what is core to their future plans. We believe non-core disposal programs are likely to come to the fore in 2021.
Meanwhile, public markets are also showing signs of life with ten IPOs completed since lockdown, while capital markets continue to be tapped for secondary equity both to shore up balance sheets and provide ammunition for acquisitions.
Debt market appetite is starting to recover with a focus on quality and recurring revenues.However, challenges exist in evaluating underlying earnings which is providing a brake on multiple leverage, but liquidity is there for the right opportunities.
High street banks are primarily focusing on existing clients and selectively looking at new business, but challenger banks and alternative lenders are very much open for new business.
The most resilient sectors for M&A activity have been:
![resilient-sectors-for-ma-2020.png]()
Also, while government support has pushed back liquidity issues to Q4 2020 and beyond, we are experiencing a rise in accelerated M&A and restructuring opportunities; particularly in sectors that have suffered during the pandemic - travel and leisure, retail, aviation, events and commercial real estate.
