Buyout activity across the North West has seen a second yearly drop in volume following a tumultuous year for much of the UK market. This is according to full-year data from the Centre for Private Equity and Management Buy Out Research (CMBOR), which is based at Nottingham University Business School and sponsored by Equistone Partners Europe.
Across the year, North West-based businesses completed 15 deals, down 25% from 20 deals in 2022. This represents the second yearly drop for the region, following a record year in 2021 with 36 deals completing. However, despite this dip in activity, the North West was the third most active region across the UK alongside the West Midlands and Yorkshire.
Deal value also dropped across the North West, totalling £770m in 2023, down 19% from the previous year. However, the region still accounted for some of the UK’s biggest deals, including Inflexion’s £342m takeover of global law firm DWF Group, and Sun European Partner’s £271m acquisition of Bolton-headquartered K3 Capital, a group of professional services businesses.
These sector trends were mirrored on a European level, with dealmaking within traditional markets such as Manufacturing (158 deals worth €14.1bn), Business & Support Services (110 deals worth €12.9bn) and Financial Services (31 deals worth €8.8bn) holding comparatively steady as firms seek value and stability in an otherwise difficult market.
However, TMT and Healthcare, two sectors which experienced a remarkable pandemic-era boom, have experienced major corrections, with valuations and volumes both falling drastically. TMT saw 148 deals worth €8.6bn, a 75.6% year-on-year decrease in deal value and the lowest figure in over a decade. Meanwhile, healthcare deal volume (38) and value (€7.8bn) were at their lowest level since 2015 and 2016, respectively.
The North of England as a whole remained the UK’s most active area outside London, with 35 transactions completing across the region in 2023. However, deal value still lagged behind that of London and the South East, totalling £1.6bn across the North compared with £5.4bn in London and £1.7bn in the South East.
Sebastien Leusch, Investment Director at Equistone Partners Europe, said: “Despite what has been another slow year for private equity activity both in the North West, nationally and across Europe, there’s good reason to feel optimistic as we head into 2024. Just as a sluggish pandemic year led to a record 2021, we’re seeing the similar effects of pent up demand in 2023 as management teams and investors have focused on building relationships and carrying out due diligence over the course of the year.
“Stubborn macroeconomic headwinds and rising interest rates have impacted the markets on a pan-European level, which has been felt acutely here in the North West. However, we’re beginning to see some stability return, helping businesses to make more informed decisions.
“While for many 2023 has felt like a pause for breath, the mid-market remains robust, with a number of strong management teams looking for investment across the North West. We’re expecting to see a number of attractive deals come to fruition in 2024, so there’s plenty to be optimistic about in the New Year.”
