European companies are taking advantage of the weak pound to snap up UK businesses, according to Clearwater Corporate Finance.
The firm says that the high number of overseas buyers was one of the most notable trends of 2008. No fewer than 64 per cent of trade sales on which Clearwater advised went to overseas – mainly European – buyers.
During the year as a whole, Clearwater advised on 26 deals with a total value of £650m, compared to 35 deals with a value of £780m in 2007 and 25 deals worth £470m in 2006.
Technology was the most active sector, accounting for almost a third of all deals, followed by support services (23 per cent), industrial products (15 per cent) and chemicals (11 per cent). More than half of all transactions had some form of private equity involvement.
Key deals which Clearwater advised on during the year included the £140m sale by chemicals company Solvay of its Warrington-based caprolactones business to the Swedish company Perstorp AB, the £129m management buy-out of North Wales chemicals company Warwick International backed by Close Brothers Private Equity, and the sale of Auto Windscreens by Aviva to the German company Arques Industries AG.
The year ended on a positive note, with four deals completing in December, bringing Clearwater’s total deals tally since the firm was founded in 2003 to just over £4 billion.
Clearwater partner, Mike Reeves, said: “The number and value of deals was down in line with the slowdown in mergers and acquisitions, compared to the peak in 2007. However there has been no shortage of overseas buyers.
“Europeans in particular are making the most of the strong euro to acquire UK businesses at prices significantly lower than they would normally have to pay. Clearwater’s international presence gives us a strong presence in these markets and access to strategic buyers.
“We expect the market to remain subdued in the immediate future, although our Accelerate offering – debt advisory and M&A services for businesses that are restructuring – is experiencing high levels of demand.