Entrepreneur M&A down by 18% in 2011
By Rebecca Burn-Callander Tuesday, 28 February 2012
The number of acquisitions of entrepreneur-led businesses dropped last year as economic turbulence sapped investment appetites.
Research by the Berg M&A Barometer (which crunches Experian Corpfin data) has found that there were only 203 deals with sale values of between £2m and £10m in 2011. This is down from 249 deals in 2010 – already a worryingly low figure. The deal values themselves are also contracting, with the average figure now just £965m last year down from £1.15bn in 2010. Bad news for business owners with an eye on the exit.
Interesting, though, is the geographic location of the deals. While London tops the charts with 87 transactions in 2011 (valued at an aggregate £418m), the North West is zooming up the ranks with 29 transactions for 2011. And while London deals are down year-on-year – by £86m on 2010 transactions, to be precise – the North West is accelerating fast, pulling in deals worth £130m, up on the 23 recorded for 2010, worth £106m. It’s growing almost as fast as London is shrinking…
Looking at deals by industry, the hottest deals are in professional and business services, which account 25% of these lower mid-market deals. Most of these acquisitions are in the legal sector, sparked by the new ‘Alternative Business Structure’ legislation. In second place, bolstered by demand from the emerging markets, it’s manufacturing with 23%.
Stephen Foster, partner and head of corporate at the firm Berg, comments on the Barometer: ‘Despite the fall in transactions within the £2m to £10m bracket, the North West capitalised on London’s drop in deal market share and consolidated its position as the most active region for lower mid-market activity,’ he says. ‘And with the North West and West Midlands being the UK's manufacturing hubs, but also major professional services centres, it is no surprise that they are now the leading driver for M&A activity outside London.’
So, if you’re an entrepreneur looking to flog your business, prospects might be sunnier in rainy old Manchester…