Mergers and acquisitions predictions for 2014

A corporate finance specialist is predicting an upturn in merger and acquisition activity in 2014.

Mark Selby, director of corporate finance at Midlands-based Baldwins Accountants, has been involved in two major deals towards the end of this year.

West Bromwich company Tentec Limited, which specialises in the design and manufacture of bolt-tightening equipment, was acquired by global industrial group Atlas Copco, while SC Feeds Limited in Staffordshire was bought by UK-wide specialist agricultural and distribution business NWF Group plc.

Mark, who has 18 years’ experience in the industry, said the number of owners of high-quality businesses starting to seriously contemplate selling their companies was beginning to increase.

“Based on the meetings that we have had with business owners over the past few months, which admittedly is only a snapshot of the entire sector, I think more quality businesses will be sold in 2014,” he said.

“I have been involved in three transactions in particular this year which illustrate the different types of buyers that we are currently seeing in the owner-managed sector.

“In April we advised on the sale of A&A Recruitment Limited to Templine Recruitment Limited which was a Venture Capital backed business. Then, last month, we advised on the sale of Tentec Limited to an overseas buyer and a week later we advised on the sale of SC Feeds to a UK-quoted plc. It is perhaps interesting to note that none of these transaction relied on the ability of the acquirer to fund the transactions solely using UK bank debt.

“Our evidence shows there will continue to be a mixture of acquisitions in 2014 and that good deals are still being done.”

Mark considers that many companies have retained their value in the market place despite the economic climate.

“In 2013, we achieved deals at really, really good prices which underlines that good, quality businesses which are profitable, well run and have carved out a niche for themselves will always attract interest,” he said.

“In broad terms, we are finding that for those types of business, sale prices are not being adversely affected by the recession.