Corporate Finance Deals Round Up | KPMG in the UK
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Corporate Finance
Deals Round Up

KPMG’s Corporate Finance team ranked #1 M&A middle-market advisor by Thomson Reuters SDC and Mergermarket globally in 2017

About KPMG Corporate Finance deals

The last year has been the best M&A market for sellers of businesses than many of us can remember. We have been seeing businesses sold at eye wateringly high earnings multiples. This has been partly due to the recent devaluation of sterling attracting overseas buyers who have been looking for growth and the massive amounts of private equity funds which have been raised in recent years and remains un-deployed. The momentum of the market is still continuing and we are involved in high levels of pitching for new mandates often from vendors who are worried that they may miss the end of the boom times as well as some who are worried that a change of Government will drive tax increases in Capital gains tax and the possible abolition of entrepreneurs relief. While there are some headwinds to be considered with the uncertainties of Brexit and the fragile political situation we expect that sellers will still be achieving great values for the coming year.

Strategic buyers continue to hunt for businesses with a track record in making solid profits, have good prospects that are backed up by a robust plan and model, and are being led by a quality management team. And, as we’ve seen over the course of the last year, there is particular interest in those businesses using cutting edge technology to disrupt a market.

Our UK M&A team has acted as lead financial advisor on over 70 deals in the last year with a number of notable trends:

  • Private equity money being put out to work to support the buy out and secure bolt on acquisition opportunities for exciting businesses
  • Weaker sterling has been a factor encouraging strong interest from overseas investors in the US and Europe – a trend set to continue with ongoing Brexit uncertainty
  • Corporate activity has remained strong as companies look to consolidate markets and drive synergy opportunities as a means of enhancing shareholder value
  • Key sectors continue to experience high levels of M&A activity including healthcare, technology, financial services, energy and differentiated businesses in retail and consumer sectors.

Actual deal volumes are down in the last 12 months, but the results where deals have happened have been very strong, as shown by the double digit EBITDA multiples that we’ve achieved on a large number of our transactions. We are increasingly seeing large corporates looking to sell off non core assets with these companies having strong interest from PE. We are also starting to see increases in distressed M&A in sectors where there has been structural change and resulting overcapacity eg retail and Casual dining which is starting to create new sources of demand for M&A activity.

Looking ahead, I expect confidence to be tested as margins are squeezed by inflation, rising input costs and softening consumer spending. However, we know that businesses are still considering the spectrum of private equity and trade when exploring a prospective fundraising option or exit route. We are seeing business owners seeking to raise funds for growth or de-risk by selling in full or in part, and the funding available for deals currently remains strong. I would expect the market to remain active for high quality businesses with deal volumes keeping a steady pace. For further details on our deals by sector and region, please follow the links below.

 

Jonathan Boyers
Partner
Head of Corporate Finance, UK
Jonathan.Boyers@kpmg.co.uk

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