RG Corporate Finance has reported another record year of M&A activity, with a positive outlook for 2024.
Despite the many economic and political challenges that have dominated 2023 and which are expected to continue into next year, the Newcastle-based corporate finance house has advised on numerous transactions, including a range of acquisitions, disposals and private equity fundraises.
With more transactions expected to complete before Christmas, RGCF will continue to deliver a strong performance right up to the end of the year.
RGCF continues to be highly active in a number of key industry sectors, including, among others, recruitment & training, industrials & manufacturing, healthcare, technology and professional services, which are generating positive, growth focused M&A activity.
Among the highlights of the past 12 months were the sale of M2 Education to Sweden-based strategic acquirer Humly, Euston Capital’s acquisition of Hammond Chemicals and Mitie plc’s c.£19.1m acquisition of security and facilities specialist RHI Irving.
In the technology sector, RGCF advised online neurodiversity training and assessment provider Cognassist on raising £4m of development capital from Gresham House Ventures, which is a growth equity investor and Venture Capital Trust (VCT) based in London.
Professional services continues to be an active sector for RGCF, with acquisitive, often PE backed or listed businesses, looking to build market share by making strategic acquisitions.
This was exemplified by North West-based MAPD Group’s acquisitions of Ashton-under-Lyne practice Bromleys, and Cumbrian law firm Thomson Hayton Winkley (THW) and its sister business The Rural Law Practice (RLP), which are acquisitions RGCF advised on from a corporate finance, financial & tax due diligence and transactional tax perspective.
Carl Swansbury, partner and head of corporate finance at RGCF, believes that despite the ‘financial headwinds’ such as higher interest rates, high inflation and political uncertainty, which can result in investor caution, there is still a lot of ‘dry powder’ in the market.
Carl said: “Our record performance in the past 12 months can be attributed in part to our experience and expertise in advising businesses on transactions in key industry sectors, but there are positive market forces that will defy financial headwinds and political uncertainty and continue to influence M&A activity.
“There is dry powder within many private equity houses, who are eagerly looking to invest into both new businesses and existing platforms to fund organic growth and strategic acquisitions, thus helping businesses to scale, diversify and consolidate fragmented markets and supply chains. In addition, there are a lot of VCTs looking to invest in high growth, scalable, innovative companies. Unlike the financial crisis of 2008, there is funding available from multiple sources, including debt funding from direct lending funds, tertiary lenders and clearing banks, which will be encouraging for management teams looking to acquire the businesses they currently lead, via a MBO type transaction.”
He continued: “There are many positive signs across the market, which is encouraging for next year. For example, despite Brexit, there is still an active economy for imports and exports with interest from international companies looking to acquire UK businesses for a variety of strategic reasons, whilst acknowledging the FOREX benefit an acquirer may realise today from buying a UK business due to where the Pound sits versus the US Dollar. We predict a growing trend for cross border transactions with overseas buyers likely to come from the US and Japan as well as a number of European countries.”
“We’ll also see a growing trend in supply chain consolidation with businesses acquiring suppliers to become more competitive through both horizontal and vertical integration. At the same time, there will be opportunities for management teams as corporates look to dispose of non-core divisions or companies.”
He concluded: “We are confident that this year’s positive performance from RGCF, delivered by a growing and highly talented team, will continue through 2024. We apply our deep knowledge of the industry sectors we focus on, technology, human capital, professional services, industrials & manufacturing and healthcare, to help our clients in these markets, at all stages of their lifecycle.
“This enables them to secure the funding needed to scale, both organically and by acquisition, or, where appropriate, exit their businesses to a strategic trade buyer, PE investor or MBO team to ensure post tax shareholder value is maximised.”