Buyers returning to deals market due to confidence boost

Buyers are returning to the deals market following a quiet 18-month period, according to Michael Dunn of Dow Schofield Watts Corporate Finance.

Deals Market

Michael Dunn, Partner in DSW’s corporate finance team in Wales, says that mergers and acquisitions activity has increased considerably over the past quarter, and the outlook is far more positive for the second half of 2024 and beyond.

Michael said: “Over the past year or so, buyers have been more cautious and selective in their approach to mergers and acquisitions, which has naturally led to fewer deals completing. However, activity is now increasing, both in terms of domestic and cross-border deals.

The expectation is that inflation and interest rates have peaked, and the base rate will likely start falling in the year’s second half. Private equity acquirers are returning to the market amidst an improvement in the cost and availability of debt, and corporates are looking to execute ambitious buy-and-build strategies following a period of relative inactivity.

The bar has gone up for acquirers, but quality businesses are very much of interest and attracting premium valuations. Business services, industrials, and food and beverage are particular sectors of interest for high-profile acquirers at present.

Business owners who have delayed selling their business now have a window of opportunity, but we advise them to explore all the options to achieve the best price. In addition to the traditional routes of selling to a private equity or trade buyer, there are now a number of solutions available, including corporate compounders such as PHD Industrial Holdings, which are an increasingly attractive option for business owners seeking a flexible succession planning solution. Good corporate finance advisors with access to decision-makers are the key to approaching the right buyer pool and maximising shareholder value”.

DSW recently advised Tredegar-based Hazrem Environmental, a hazardous and liquid waste management specialist, on its sale to Biffa.

Michael added: “The outlook is very positive for the deals market. Advisors, investors and buyers are all ready for an exciting and busy second half of 2024 and 2025″.