Crystal ball

BDO predicts M&A ‘perfect storm’ in UK mid-market

BDO, the accountancy and business advisory firm, has released data that shows a strong M&A pipeline heading into 2014.

Using an analysis of its own deal leads, it has found that a ‘perfect storm’ has developed on the back of growing demand from buyers – particularly from overseas looking to invest in UK companies, an increasing availability of funding for deals and a more buoyant economy that is now even reaching sectors hit very badly by the previous recession such as building products. 
 
The regional spread of lead volumes has changed dramatically in 2013, where London’s dominance has been reduced from accounting for 42 per cent of all M&A leads in 2012 to 23 per cent this year.  This reduction is largely due to a surge in activity seen by BDO’s regional offices, where there is renewed activity surrounding mid-market and entrepreneurial business that tend to be based outside the Capital. This effect is compounded by BDO’s merger with PKF this year which has enlarged the regional footprint on the firm and will help the expansion of the M&A practice in 2014.
 
The pharmaceutical sector saw the most prominent resurgence in lead volumes, almost trebling its 2012 total of 11 to 32 this year.  The manufacturing & industrials sector also saw an increase of 43 per cent in 2013.  The building products and real estate & construction sectors doubled their 2012 totals as a result of bountiful infrastructure opportunities and the property market boom buoyed by the various government stimulus measures including the Help to Buy scheme, which looks set to continue into the New Year.
 
Tim Clarke, corporate finance partner, BDO LLP, says: “We are seeing a ‘Perfect Storm’ developing in the UK mid-market at the moment, where there is clearly a lot of pent-up demand.  People have had to sit on their hands for several years, and only now seriously considering corporate finance backed activity.
 
“Internationally, the UK is seen as a very attractive place to be at the moment.  Renewed growth estimates in our economy in real terms and which compare favourably against other western economies have prompted investment flows into the country from Europe and farther afield.”

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