By Patrick Abel, Corporate Finance Partner at Hart Shaw.
2014 was a reasonably active year for deals locally with local listed companies making several acquisitions. One noticeable aspect of 2014 was the number of acquisitions by “turnaround funds”.
There are still plenty of businesses out there which are struggling to service the debt they took on pre-recession and whilst fundamentally good businesses they need to restructure their balance sheets. As a result there are a range of new funds directly targeting these businesses to put in place either debt or equity solutions to help these businesses stabilise and grow. This is a trend I can see continuing throughout 2015 and beyond.
International groups are continuing to target specialist UK businesses particularly those allied to aerospace. Plc’s have significant funds available and therefore are also looking to make acquisitions both at home and abroad. We are increasingly dealing with buyers from the USA and India who are looking at Sheffield City Region based businesses across a broad range of sectors.
The management buy-out market is now beginning to gain some traction with more liquidity coming into the market from private equity, increasing availability of debt from banks and Asset Based Lenders, partially aided by government intervention such as the Enterprise Finance Guarantee Scheme which offers security to banks of up to 75% of the loan balance. In addition, other funds such as Finance Yorkshire, UK Steel Enterprise and Finance For Enterprise are also providing funding for buy-outs and development capital.
We have had a very busy start to 2015 with several transactions closing in the first quarter and a very strong pipeline of deals including several management buy-outs as well as working with acquisitive clients so it looks like this could be the best year since 2007 all being well.