Yorkshire and North West teams buck trend with 32% rise in deal values

James Dow - rise in deal values

Despite the challenges of 2020, Dow Schofield Watts’ Northern offices enjoyed a record year in terms of the value of deals they advised on.

The teams in the North West and Yorkshire completed 54 deals with a total value of £1.27bn during the year. While the number was lower than the 69 recorded the previous year, the overall value was up by 32% and the highest to date.

James Dow, founding partner and head of the corporate finance team, said deals activity had bounced back at a surprising pace after the initial shock of the first lockdown: “Each crisis is different but from an investment point of view, the pandemic has been much like previous crises including the dot.com crash, the financial crisis and the Brexit vote. There are two to three months of initial shock when all “norms” are reassessed, then business must return to work. The upturn always comes and so it did by the summer. The recovery was significant – winners and losers were quickly identified and investors responded.

“Company valuations have held up, private equity managers are increasingly proactive in building their investee companies through M&A and winners are even more attractive to investors. The pace of change initiated by the pandemic shows little sign of abating which is fuelling a new bubble in technology company pricing. The outlook for the deals market remains strong.”

Key deals the North West team advised on included the recent £100m merger of Lomond Capital and Linley & Simpson and NVM Private Equity’s sale of Agilitas IT Solutions to Perwyn.

Ed Brentnall, joint head of the North West transaction services team, added: “Aside from some initial disruption in the first lockdown, nearly all of our deals continued as normal with volumes as strong, if not stronger than before. This is a testament to the resilience of sectors such as IT, financial services, medical and professional services, confidence on the part of clients and the remarkable ability of our teams to cope with the swift transition to remote working.”

Key deals for the Yorkshire team included the sale of Comms Design to Unipart Rail; the acquisition of Tile Giant by investment group Coverings; BGF’s investment in Bayfields Opticians; the MBO of Lights4fun backed by NorthEdge Capital; and the acquisition of NMC Group by GRITIT, group backed by Total Capital Partners.

Roger Esler, head of the Yorkshire & North East Corporate Finance team, said: “After the initial shock in March, when survival was a priority, businesses in most sectors got back to work with determination. The unprecedented government interventions, availability of capital and general financial health of large corporates resulted in a resumption of paused deal processes over the summer, compounded by new processes coming on stream in Q4.

“Business valuations have held up strongly. Buy and build activity in private equity portfolios will be evident alongside new investments, notably in value-add services and technology-led businesses. The attractiveness of the UK has increased with Brexit behind us and with a low exchange rate, cross border trade buyers will be very active. Although the hardest hit sectors in retail and hospitality will need to be refinanced and restructured, overall the outlook for the deals market for 2021 remains strong and diverse.

Sophie Colloby, head of the Yorkshire transaction services team, added: “Following a strong start to the year and high M&A expectations, we spent the initial lockdown period helping clients with immediate business issues such as cash flow forecasting while transitioning to remote delivery of our core due diligence work. The fact that deals activity has resumed reflects the remarkable ability of our team and our clients to rise to the challenges.”