James Wild
Head of Mergers and Acquisitions
Rob McCarthy
Head of Transaction Services
Foreword
It is fair to say that 2023 has been challenging in the transactions market. A combination of weaker consumer spending, rising interest rates, inflationary pressures, and geopolitical tensions have contributed to a subdued deal environment.
The reduction in appetite is felt more when compared to the buoyant markets of the previous two years. Putting a positive spin on matters – is this just a return to similar pre-pandemic deal volumes and pricing? The reality is deals are still happening and there has been a notable ‘flight to quality.’ Private equity has also found it difficult to source premium deals and when a good opportunity arises there is still something of a feeding frenzy. This has pushed up valuation multiples on those quality assets.
2023 has been the year when data analytics has become a central part of transactions in the mid-market. Data driven story telling is now embedded into the deal process, helping unlock value and mitigate deal risk.
A trend that has emerged in 2023 is a continued proliferation of buy-and-build. Whilst this has long been a proven thesis for building equity value, the lack of platform investments has further accelerated the trend. This itself presents its own challenges around an often-underestimated process – post deal integration. As a business we have invested in our integration capability to be able to help our acquisitive clients to manage risk and enhance value.
When looking back to previous periods of lacklustre deal activity, it is often a time of ‘opportunism’ when factors such as liquidity and regulation converge to make a situation ripe for a transaction. We have seen a big uptick in special situations advisory where we have helped our clients divest of non-core subsidiaries or refinance.
2023 has been the year when data analytics has become a central part of transactions in the mid-market. Data driven story telling is now embedded into the deal process, helping unlock value and mitigate deal risk.
Looking ahead to 2024 whilst the headwinds remain, a prospect of reducing inflation, a potential change in government and capital gains tax and a likely peak in interest rates could mean investors and corporate buyers move forward with greater confidence in the second half of 2024.
This report shows the numerous highlights across our deal advisory business throughout 2023. The standout was the divestiture of public safety and control room software business, Eagle NewCo Limited, by NEC Software Solutions UK Limited. Our M&A, special situations, transaction services and data analytics teams worked together to deliver a fantastic result for the client.
Looking ahead to 2024 whilst the headwinds remain, a prospect of reducing inflation, a potential change in government and capital gains tax and a likely peak in interest rates could mean investors and corporate buyers move forward with greater confidence in the second half of 2024.
A big thank you to all our corporate and private equity clients, we look forward to working with you in the years ahead.