MA2017-Final

M&A Advisory Firm of the
Year - UK
Avondale
Kevin Uphill
M&A buyers beware – the competition just got fiercer
Kevin Uphill, Chairman at business sales and
acquisitions strategy boutique, Avondale, explains why
Private Equity funds are increasingly calling the shots
in the SME M&A market.
For company owners looking to expand their business,
there has always been intense competition for quality
acquisition opportunities – but now there is a new rival in
town.
Around the world, the role of Private Equity (PE) funds in
M&A markets has been building steadily, with PE buyouts
now responsible for roughly a quarter of global acquisitions.
The impact of PE firms has been especially felt in the UK
lower-mid-market, where control investments in SME firms
surpassed £3.3 billion in both 2015 and 2016.
Since launching our practice 25 years ago, I’ve seen Private
Equity buyers emerge as an important outlet for Avondale’s
business sale clients as they assess their exit options, and
PE funds are now a key element of our global network of
active acquirers.
There are several key reasons for this trend.
Today’s investors are seeking returns at a time of low
interest rates and weakening property asset classes.
Alternative assets have become a vital outlet for institutional
and private investors, leading to a surge in fund inflows.
According to PitchBook, a data provider, more than $250
billion was raised by PE and Venture Capital funds across
Europe and North America in the seven months to August
2017. Fundraising looks set to eclipse 2016 levels, when
$344 billion was raised.
However, with fund managers themselves facing a dearth
of attractive investment opportunities, record sums of “dry
powder” PE money is lying idle, waiting for a home. Shorn
of traditional options, managers are turning to acquisitions
of SME and lower-mid-cap companies to generate returns.
PE funds have a number of advantages over trade buyers.
PE firms typically enjoy strong relationships with financial
advisers. Many also boast superior in-house dealmaking
capabilities, particularly with regard to pre-merger
planning and post-deal integration.
Deep multinational expertise also makes PE firms well
positioned to manage cross-border M&A transactions,
particularly where an acquirer is actively sought and the
target is from a country with poor corporate governance.
With a restricted bank lending environment making it
increasingly challenging for trade buyers to raise cash for
acquisitions, I can see PE firms becoming even more of a
key influencer of M&A activity in the years ahead – both
here in the UK as well as overseas.
For business owners considering their exit options, this
can only be a good thing.
Founded in 1991, Avondale is a multi-award winning
international mergers and acquisitions advisory
boutique that combines world-class capabilities with
a personalised, client-led approach.
Avondale’s specialist advisory team work with private
businesses and larger corporates in the UK and around
the world, helping them to achieve their objectives,
whether buying, selling or merging companies.
Since our launch, we have overseen the sale and
purchase of more than 500 companies, working with
clients across a broad range of industries and
geographies. We are proud to be the Institute of
Directors’ preferred business sales, acquisitions and
strategy provider.