Private Equity activity accelerated sharply at the start of 2021 according to Addleshaw Goddard, which has closed over 20 private equity deals in the last month alone.
The law firm, which has reported a "phenomenal amount" of deal activity, says that the willingness to do deals shows UK businesses are adapting to face opportunities in the COVID, and post-COVID, environments.
Mike Hinchliffe, Private Equity partner at AG, said that although everyone knew deal activity was increasing, much of this has been explained as fuelled by fears of tax increases in the Chancellor's budget. However, he stressed that if you look at the companies involved, it becomes clear this is only one of the drivers for such high activity levels.
Mike said: "We saw a flurry of deals in the run up to the budget, but concerns over tax rises were only part of the story. Most of the deals involved high-growth UK businesses, with business models aligned to the "new normal", being backed by supportive investors for future expansion. The support being offered by PE firms for these pioneering businesses bodes well for UK plc."
Market reports suggest activity is increasing in more obvious sectors such as healthcare, life sciences, software and digital communications, as well as companies who are acting as disruptors of more established legacy markets. Addleshaw Goddard's own experience during this busy period certainly supports this market-wide trend too.
Paul Medlicott, another Private Equity partner at AG, added: "What we are seeing demonstrates there is still a lot of confidence in UK entrepreneurialism, even despite the uncertainties created by COVID and Brexit. Investors are backing companies that are still relatively young in their growth story, and are hungry for deal activity. If this continues – and there's no reason why it shouldn’t – it is very good news for the UK market at a time when good news is at a premium."
Deals which AG have been involved in during February and early March include:
- Phoenix Equity Partners' buyout of Universally Speaking
- LDC's investment into Wireless CCTV
- CBPE Capital's investment in Mindera Holdings
- ECI's sale of Edenhouse Solutions to Accenture
- Phoenix Equity Partners' buyout of Setfords Solicitors
- The sale of Miller Insurance to Cinven
- The MBO of CMSPI backed by Inflexion
- Equistone's buyout of Ligentia
- The acquisition of HWF Insurance Brokers by The Ardonagh Group
- Sale of LDC-backed ChargePoint Technology to Arcline
- The MBO of Aquaspersions backed by CBPE Capital
- Sovereign Capital Partners' investment in Bioscript
- Cairngorm Capital's acquisition of Whyte Bikes
- The sale of Cloudshift to Globant
- Bridges Fund Management's investment in Nkuku
- Investment by Magenta Partners in Voly
- LDC's exit from NBS in a sale to Byggfakta Group
- Sale of GCP-backed Infinity Works to Accenture
Mike said: "These market trends, together with the fact that the feared tax rises didn't come, means we are expecting to see this activity continue into the summer and beyond. Obviously there is still a lot of uncertainty in both the short and medium term, but the strength of the businesses involved in these transactions offers a huge amount of optimism that the UK continues to nurture and support high growth business opportunities."