M&A ACTIVITY SURGED IN 2021

Mergers and acquisitions surged at the beginning of 2021 as businesses pushed forward with strategic transactions put on hold when the pandemic first hit.

According to the latest UK M&A Review by Experian Business Research, the UK saw an unprecedented level of deal making in the first quarter of 2021. However, transaction volumes settled down to a more moderate level over the rest of the year.

The 6,917 deals involving a UK company in 2021 represented a 14.3 per cent upturn on the 6,053 transactions announced the previous year, with close to every region of the country returning double digit year on year growth.

There was a 27 per cent increase in the number of corporate acquisitions and a 51 per cent upturn in buy-out volume year on year.

According to the Experian report, headline deals involving companies across our region include Coventry aerospace group Meggitt which is in the process of being acquired by US-based Parker Hannifin Corp in a £6.3 billion deal. The transaction is expected to close in the third quarter of this year.

Another high-profile sale was of Chippenham-based inhaler manufacturer Vectura to tobacco company Philip Morris for £1.1 billion last September, following a lengthy battle with private equity giant Carlyle. The sale to Philip Morris angered some health groups such as Asthma UK and the British Lung Foundation which challenged whether a tobacco group should own a company that treats the respiratory illnesses cigarettes cause.

In March last year, National Grid acquired the Bristol-based Western Power Distribution in a £7.8 billion deal.

Alongside the number of deals, the professionals enjoyed a successful year. At the top of the 2021 legal advisory table, Midlands-based law firm Harrison Clark Rickerbys provided advice on a total of 191 qualifying transactions. Cheltenhambased accountants Hazlewoods came in at number five of the financial adviser ratings, with 126 qualifying transactions.

Who’s funding M&A activity?

Private equity bids for UK companies soared in 2021, with the number of private equity-backed buy-outs reaching 520, up from 340 in 2020 and representing by some way the busiest year for the industry, according to Experian’s records.

Private equity houses are sitting on unprecedented levels of capital.

Management teams also seem to be more receptive to private equity approaches than might have been the case in the past. Widening the scope to include more early-stage growth investments as well as outright buy-outs, the Business Growth Fund was the UK’s leading investor by transaction volume, completing 80 transactions in 2021, followed by Octopus (40 deals) and LDC (38).