A look back over 2018 and some thoughts for 2019

    Corporate finance activity in 2018 was extremely buoyant in the Thames Valley with high levels of both fundraising and M&A activity, writes HMT.

    As leading advisers to entrepreneurial businesses in the region, we successfully completed 32 deals last year with a total deal value in excess of £350 million which allowed us to increase our turnover by over 50%.

    We have advised businesses operating in a wide range of sectors including manufacturing with the MBO of UAP, digital media with the fundraising for Channel Mum and the investment in Smyle Media, business services with the acquisition of Interact Training Group, logistics with the acquisitions of Parcel Hub, Mail Workshop and Spark Ecommerce Group by Whistl, telecommunications with the secondary buyout of Indigo-Belcom and education with the fundraising for Waterbear.

    Against a backdrop of political and economic uncertainty, there are those predicting an imminent global financial crash at a scale worse than 2008. However, this is not a view shared at HMT and with the benefit of a strong 2018, we have made the decision to invest heavily to ensure that we continue to expand our support to businesses and business owners.

    While there could of course be some bumps on the way in the short term, as for example Brexit unfolds, we have been in the Thames Valley for 26 years and continue to take a long-term view.

    Despite strong demand for the best people, we have been able to strengthen our team with a number of senior hires. In response to a significant increase in fundraising and M&A activity in the TMT sector, we have established a specialist technology team within corporate finance led by new partner James Thomas and Charles Laughton. 

    As a corporate finance boutique, we are unique in that we have specialist transaction delivery teams who can support a transaction covering all of the four key disciplines of due diligence, debt advisory, financial modelling and tax advisory.

    Odhran Dodd has recently joined as a partner to head up and strengthen our debt advisory offering and we will be making two further announcements very shortly on our expansion of other specialist teams.

    While we pride ourselves on genuine partner led delivery, it is essential that they are supported by high-calibre professional staff and we have recently recruited three exceptional chartered accountants from the Big 4.

    So what are our predictions for deal activity in the Thames Valley in 2019?

    There seems to remain a wall of liquidity available in the market from various funding sources including private equity and VCTs which are under increasing pressure to put cash out. The involvement of non-PE funders is increasing with family offices, high-net-worth individuals and mezzanine debt funds having a large amount of funds to invest. The crowdfunding market continues to mature and is becoming more mainstream as a funding option for earlier stage businesses.

    As a result from liquidity availability, our prediction for 2019 is a continued increase in M&A activity, especially in the TMT sector. Technology M&A levels will remain high in the next few years with particular emphasis on fintech, machine intelligence and cyber security as inter-related areas driven by further use of mobiles for banking, payment systems and ID authentication.

    The energy and waste management sector is also likely to observe strong growth in the next few years, boosted by consumer trend for a greener lifestyle and government regulations around the use of recyclable and recycled plastics in the supply chain and the increased responsibility for waste disposal.

    There will also be a significant amount of market consolidation in business support sectors such as recruitment and logistics as pricing pressure from customers and wage cost inflation puts pressure on margins pushing medium to large corporates adding scale and restoring earnings through acquisitions and centralising back office functions to reduce the overhead base of the enlarged group.

    Continued uncertainty around Brexit and the potential ramifications of ‘no deal’ on March 29 will continue to suppress sterling making acquisitions an attractive strategy for overseas corporates seeking to establish a presence in the UK market. M&A activity within our international network ICFG continues to increase and we are currently working with our partners in Europe and Asia on various mandates both in the UK and globally.