Another Good Year for MHA Corporate Finance Team

Congratulations to three of our member firms who feature highly in the Experian MarketIQ 2016 UK & Ireland M&A full year Report.

Broomfield Alexander, finished top of the Wales league for a second year completing 16 transactions. Tait Walker moved up 1 place, finishing top of the North East, they completed 13 transactions, and Larking Gowen moved up 12 places to 10th place for the East of England, completing 8 transactions.

On a combined basis, MHA firms completed 62 transactions in 2016, which would place us 12th in the UK financial advisor rankings by volume.

Well done to all and the great work they are doing to help so many businesses across the UK.

If you would like to speak to a member of our national Corporate Finance team, please email Hannah Farmborough or call on 0207 429 4147 to be put in touch with your local representative.

Deals continue to increase despite Brexit vote

So far, 2016 has proved to be another busy year for corporate finance advisors, with deal volumes continuing to increase year on year. Whilst the number of transactions taking place has not quite reached the pre-recession levels seen in 2007, the number of deals taking place is continuing to increase, and if the volume of deals continues to grow at the same rate then we anticipate volumes will soon exceed pre “credit crunch” levels.

Will Brexit burst the M&A bubble?

Opinions have differed widely about the potential effects the Brexit vote may have on the number of business acquisitions and sales taking place in the UK market and beyond. According to Experian, while the overall value of deals completed has fallen, the number of deals carried out by UK businesses has held up remarkably well. In fact, for the first six months of this year, 3,404 transactions completed, which was a 1.5% increase on 2015’s return of 3,355 deals and represents the busiest first half of a year for the UK market since 2007.

Ultimately, at this stage, it is too early to predict the impact that Brexit will have on the UK transactions market. There should be little difference in the appeal of a UK company taking over a fellow UK company. However, from an international perspective, the depreciating pound will make UK companies a more attractive and cheaper proposition for foreign purchasers. This is perhaps highlighted no better than by SoftBank’s £23.4 billion takeover of Cambridge based technology giant, ARM Holdings. This deal has been hailed as proof by many politicians that Britain is an attractive place to do business, amid lingering concerns over the impact of the Brexit vote on UK companies.

What does the future hold?

We do not hold a crystal ball to predict the future. However, the recent reduction in the bank of England Base rate means that debt finance can be obtained cheaper than ever before. With successful companies earning little or no bank interest on their surplus cash, there is increased appetite for seeking acquisitions as a way of improving their returns.

If you would like to discuss any aspects of business acquisition, disposal, valuation or funding, please contact Hannah Farmborough or call on 0207 429 4147 to be put in touch with a member of our Corporate Finance team.

This article originally appeared on the blog of our member firm, Larking Gowen

Brexit, what does it mean for Corporate Finance?

Whatever your point of view, there is no doubting that the recent Leave result has caused a level of uncertainty in the economy, with a direct impact on currency and share markets.

Some companies may see this as a huge opportunity, particularly those who are purely exporting, but for many others with cross border trading for both purchases and sales, investment projects, customers with overseas connections, this will be a time to test contingency plans.

In recent years, deal volumes and investment by companies has increased, and we have seen a particular increase in cross border transactions. Many of the cross border transactions were to provide the acquirer with access into the European Single Market.

For the time being, the UK is still in the EU, including enjoying the benefits of the single market and having to abide by the laws, as we did before the referendum. However, with the uncertainty over the UK’s economy and the role within the EU, we expect a temporary reduction in volume and amount of investment during this period of adjustment.

In our short experience since the result, we have seen additional challenges faced by companies with a European dimension in raising finance and some review of the anticipated benefits of some projects.  However, we have also seen a number of transactions continue without drawing breath.

It is in the nature of running a business and undertaking transactions, of any size, that there will be bumps and unexpected events along the way. It is a good time to review the business strategy, consider the ways in which any risk can be mitigated and options for the different outcomes.

Specifically in Corporate Finance, it is worth reviewing any investment project or transaction to consider the potential impact of the uncertainty and an ultimate Brexit, review the benefits and the funding or valuation structure. This may include revisiting the due diligence process.

Much will depend on how the post referendum process, whatever the outcome, is managed and the return of certainty to the economy, including visibility over what the relationship with the EU might look like. We feel that the resilience and flexibility of the economy, particularly the SME market, is strong enough to weather the current turbulence.

If you wish to discuss strategy in the wake of Brexit or review your exit or acquisition plans, please contact Hannah Farmborough or call on 0207 429 4147 to be put in touch with one of the members of our Corporate Finance team.

This article originally appeared on the blog of our member firm, Broomfield & Alexander.