2020 has been a year of unprecedented challenges, affecting every part of our society. The UK economy and its entrepreneurial engine room has had to adapt quickly to survive and, despite the hugely challenging circumstances in which they have had to operate, we are grateful to our clients for continuing to instruct us to help them with their M&A activities.
As published in our most recent quarterly Private Company Price Index, transaction volumes in Q2 2020 were down 59% on Q1, with 250 deals completed across the UK. As lockdown came in to force at the end of Q1, there was a sudden drop-off in activity, but interestingly no further deterioration was experienced, with M&A volumes remaining steady month-on-month throughout Q2. Notably it was businesses in resilient sectors including technology, healthcare and life sciences that continued to transact.
As a Corporate Finance team in Scotland we have been encouraged by the level of continued appetite to transact, having completed 10 transactions, with a combined deal value of £175m since lockdown began.
Moving forward we expect to see a mixed picture, with some hard-hit sectors absent from the M&A arena. Businesses which continue to transact are likely to be those in resilient sectors, which in turn should continue to attract decent multiples. We would also expect to see an increase in the use of earn-out structures in order to get deals over the line.
We remain encouraged by our pipeline and deal flow, with Q4 2020 set to be busy as we continue to support clients navigating their way through these uncharted waters.
Deal highlights include:
Advised the shareholders of Green Home Systems on the sale of a 50% stake in the business to Circularity Capital LLP.
Established in 2014, Green Home Systems is an award winning energy efficiency company, installing insulation, boilers and other energy efficiency measures into homes across the UK.
Measures are delivered under the UK Government’s Energy Company Obligation scheme (“ECO”) on behalf of obligated energy providers, with ECO a key component of the UK Government’s strategy to tackle fuel poverty and reduce carbon emissions.
Advised Last Mile in relation to its acquisition of Icosa Water Limited (Icosa).
Last Mile (backed by Infracapital) is a national electricity and gas domestic connections company working for many of the UK’s leading house builders, construction firms and independent consulting companies.
Icosa provides homes and commercial premises with last mile water and wastewater connections design, build and ownership services across England and Wales.
Advised the family owners of M&Co on the acquisition of its trading subsidiary out of administration via a pre-pack deal.
We supported the shareholders in raising finance to fund the transaction and provide working capital facilities to allow Management to deliver its growth strategy.
Advised Bibliographic Data Services (“BDS”) on the buy-out of a significant minority shareholder that is listed on the NY Stock Exchange, funded by senior debt facilities from Santander.
BDS aggregates, curates and delivers metadata relating to print and e-books, audiobooks, film, music and video games, predominantly for the UK library sector.
Acquisition of Velocimetrics Limited by Beeks Financial Cloud Group plc.
Beeks Financial Cloud Group Beeks Financial Cloud is a UK-based low-latency service provider for institutional capital markets. With eleven data centres globally and low-latency connectivity between sites, Beeks Financial Cloud focuses on reducing barriers to entry and time to market for institutional clients.
BDO provided financial and tax due diligence to Beeks Financial Cloud Group on the acquisition of network monitoring and trade analytics software firm Velocimetrics Limited.
Aliter Capital investment in Temple Grange Partners, a leading FCC Consulting firm, to support the creation of a differentiated eLearning solution.
Temple Grange Partners' innovative eLearning solution will be developed in close partnership with Aliter's existing portfolio companies Sponge and Bolt Learning.
BDO provided financial and tax due diligence to Aliter Capital on the investment.
Acquisition of the Crown Portfolio by Urban Logistics REIT plc.
Urban Logistics REIT plc acquired a portfolio of seven properties across the UK for a consideration of £47.2m. The listed UK-based logistics property investor acquired the Crown Portfolio via the purchase of a Jersey unit trust from funds controlled by Legal & General Investment Management.
BDO provided financial and tax due diligence, tax structuring and SPA advice in support of the transaction.
About BDO Corporate Finance
BDO provides end-to-end advisory support on Corporate Finance transactions. Our fully integrated service includes specialists from our M&A Advisory and Transactions Services teams, with support provide by colleagues in transactional tax. We work with sellers, strategic buyers, private equity and lenders across the full spectrum of transactions, domestically and internationally.
For more information, please contact Craig Martin or Rory McPherson.
What our clients say about us:
“We engaged the M&A team at BDO to assist us with a share re-structuring and buy-back, which also involved raising finance to purchase the shares. The team exceeded our expectations. They were professional, responsive, communicated well, and closed the deal in line with projections. They quickly understood our rather complex business, negotiated the sale of shares using sound valuation methods and prepared an impressive information memorandum for prospective lenders, which facilitated raising finance. They provided support at every stage of the process, allowing us to continue to run our business while the process was progressing. We recommend the M&A team at BDO to any business undertaking transactions of this nature.”
Lesley Whyte, MD of Bibliographic Data Services Ltd
“I would like to thank BDO for their assistance in helping us to formulate and facilitate an exit strategy which led to the successful sale of Green Home Systems.
When selecting a Corporate Finance advisor it was important to us that they understood the dynamic nature of our industry and how best to articulate the regulatory environment to prospective purchasers. Once appointed we were impressed by BDO’s ability to quickly learn the nuances of our business and develop a plan that met our strategic objectives.
The corporate finance team provided an excellent level of service, preparing high quality marketing materials and presentations and ensured that the due diligence process remained on track throughout.
BDO were instrumental in maximising shareholder value and I would have no hesitation in recommending them to others.”
Steven Easton, MD of Green Home Systems
"We had a great experience working with BDO on this corporate acquisition and were extremely impressed by their joined up and pragmatic approach, which extended to working closely with our legal advisers. They utilised their specialist expertise and sector knowledge to provide timely and proactive advice throughout the process. We look forward to working with BDO on future transactions."
Christopher Turner, Property Director, Urban Logistics REIT PLC