BDO’s corporate finance team in Scotland has advised on 24 completed deals so far in 2023, with a total value of £722 million and several more in the pipeline between now and the end of 2023.
The completed deals were across a variety of sectors including technology, support services, real estate and healthcare. Clients have included iomart group Plc, The Denholm Group, Frasers Group Plc and The Weir Group Plc. Private equity transactions were also a significant feature, accounting for 60% of the deals completed and involving investors such as Aliter Capital, Montreux Capital Management, BGF and Rockpool Investments. In addition, 38% were cross-border deals and largely reflected inbound interest from international acquirers and investors.
Against what was a more volatile backdrop in 2023, a key theme has been the appetite of private equity owned businesses and strategic corporates to continue to execute buy and build strategies. Private equity funds and corporate acquirers still have significant capital to deploy and are choosing to employ this lower risk growth strategy rather than looking to complete more risky platform investments. Despite the risk profile typically being lower, another key theme has been an extension to the length of deal processes as acquirers and investors have adopted a more cautious approach and a fuller approach to diligence.
Buy and build was a feature in a number of BDO’s key deals in Scotland, which included sell-side advice on Rcapital Partners’ sale of technical facilities management and energy solutions company, Richard Irvin FM to RSK Group, and on the £45m sale of cladding specialist Topek to Brickability Group plc.
Looking ahead to 2024, BDO’s bi-monthly survey of mid-sized businesses recently revealed that more than a third (36%) of Scottish firms would consider accessing private equity or VC investment in order to fuel growth over the next six months, whilst a quarter would consider M&A activity.
Craig Martin, Transaction Services partner at BDO, said:
“Whilst 2023 has definitely been a more challenging year for dealmaking, a number of our clients have taken the opportunity to create real value by continuing to deliver inorganic growth strategies and particularly in sub-sectors that remain very fragmented such as IT services, technical services and technology.
“That trend is reflected in our current deals pipeline, and we expect it to continue with deal completions in the run in to the year end and into 2024.”
Rory McPherson, M&A partner at BDO, added:
“Although there has been a decline in overall UK deal volumes in 2023, we have continued to advise and support entrepreneurial business owners, UK and international strategic trade buyers, and private equity investors to deliver on their M&A strategies. This year we are pleased to have invested in and grown our deals advisory team in Scotland in order to meet demand from clients. Looking ahead to 2024 we anticipate increased transaction volumes.”
