‘Positive growth’ in East of England M & A market as momentum builds

The M & A market will always tell an interesting story in the East of England, regardless of the notable challenges businesses face and despite what may be going on in the wider market, writes John Gethen, M & A director with BDO and Vinod Patel, a transaction services partner in the region for BDO.

As we approach the first Autumn Budget under a new Labour Government, much will be made about how this will impact M & A appetite. However, outside of the political permutations of the 30 October announcement, the deal landscape in the region has thrown up some standout transactions so far this year, as well as a number of noticeable trends.

According to a report from Experian Market IQ, in the opening six months of 2024 the performance of the regional M & A market varied depending on size.

In H1, there were significantly more large (12) and ‘mega’ (3) deals completing in the East of England, with the value of those transactions reaching just under £4 billion and £8.6 billion, respectively.

This was in contrast to H1 2023, when just seven large deals and one mega deal were reported – valued at £2.4 billion and £1.5 billion. So the number of large and ‘mega’ deals in the East of England have increased dramatically. The mid-market and sub-£10 million markets paint a slightly different picture, with both deal value and volume falling in the first half of the year, compared to the same period in 2023.

Fluctuations across the market are to be expected. What is encouraging to see is, despite the ongoing challenges, overall there remains positive growth in the M & A market as we go into the final quarter.

So what transactions have caught the eye so far in 2024?

When it comes to large and mega deals, the biggest deal recorded in the region is by Luke Bidco – an investment vehicle controlled by US private equity firm Thoma Bravo. It completed the all-cash acquisition of Darktrace at the start of October, buying the Cambridge-based publicly traded cyber security company for $5.3 billion (approximately £4.25 billion).

The theme of overseas investment continued in Hertfordshire, with the sale of LDC-backed Cardel – a leading manufacturer and supplier of specialist components used in the production of secure ID documents, payment cards, printed circuit boards (PCB) and other laminated products.

In June, BDO advised on the sale to listed Swedish investment group Lifco, which invested in Cardel to support the Baldock-based business on the next stage of its growth journey, as it looks to target further global expansion, product development and application development.

Similarly, BDO advised on the acquisition of JCW Group Limited – a technical facilities management service provider – which was sold to Apleona, a German private equity-backed integrated facilities management group. JCW specialises in technical facilities management and provides services across wide areas of the UK.

While international investment provides a strong undercurrent to the regional M & A market, when you delve a little deeper into the deals activity across the region, there are also some excellent examples of homegrown transactions, with BDO also advising on the acquisition of Shefford-based Centrality Management Limited – an IT support and technology services provider with more than 25 years of Microsoft experience.

The business was acquired by Intercity, transforming it into a £60 million-turnover company with a more than 325-strong team, providing further regional presence and a platform for Centrality to grow.

Given the quality of businesses that exist within the region, it’s not surprising that dynamic companies with an exciting growth story to tell continue to attract the attention of trade buyers and investors – whether that derives domestically or from overseas.

However, in the current macro-economic environment, where deals take longer to complete with greater execution risk attributed to certain, uncontrollable macro-factors, the key to successful dealmaking remains preparation well in advance of any formal process.

Whether it is optimising operations, enhancing data analytics capabilities, reassessing capital structures or improving working capital management, proactive steps taken now can significantly impact future transaction outcomes.