In 2017, around 3300 deals were announced, compared to circa 3800 deals in 2016, representing a 13% fall year on year. (Our analysis, based on data provided by BvD / Zephyr, includes all deals announced in the relevant period which involve the acquisition of a stake of 20% or more in a UK based company).
Andy Moore, Managing Director, commented: “As we predicted this time last year, we have seen a reduction in deal volumes in 2017 (our original prediction was circa 3000 deals). This result was not surprising, given the uncertainty around Brexit.
Our current view on the outlook for 2018 is that we will see an increase of around 10%, taking deal volumes back up to circa 3600 for the year and closer to the levels of activity seen in 2016. This is still significantly lower than the previous 3 years, but we are certainly seeing an upturn in deal activity. Factors that will have an impact upon deal-making volumes will be Brexit as negotiations continue during 2018 and interest rates. However, there is an underlying level of demand by trade purchasers seeking strategic acquisitions and private equity investors looking to back high quality businesses and management teams that will support an overall increase in deal volumes this year.
Cross border deals continue to represent circa 25% of all deals announced, with US purchasers accounting for over a third of all cross-border deals.
Exceptionally strong levels of activity are being seen in the technology sector, accounting for around 20% of all deals announced during 2017. During the year, Bracebridge announced the appointment of Mark Roberts as Software and Technology Industry Advisor, in response to the increasing volume of opportunities in the sector. In the first two months of 2018, we have seen almost 100 transactions involving software or online businesses.
We are also seeing high levels of activity in the healthcare sector. Last year, we advised on the £17m sale of Selborne Care, a residential and supported living provider, to Caretech, and the sale of occupational healthcare provider, IMASS, to Medigold Health Consultancy. We are also seeing a number of opportunities involving medical technology. Frank Collins, Chairman and Healthcare Industry Advisor commented: We continue to see major funding pressures within the healthcare system and this is driving change in the provision of healthcare. Those companies which can demonstrate a willingness and a competence to provide products, technology and services which fit into this shifting landscape of service delivery will not only survive in a challenging environment, but should thrive and in doing so become valuable acquisition targets”
Andy Moore added: “There will continue to be some uncertainty around the political environment and Brexit, but volumes are increasing and vendors can realise attractive valuations, provided they have taken all the right steps to prepare the business for sale and they are ready for due diligence”