Deal Insights – Mishcon Corporate

Market conditions are improving.  We are seeing a lot of M&A activity.  If we are not at 2005/2006 levels we are certainly approaching those levels.

Right now economic conditions are favourable; we have a low interest rate environment, capital gains tax on any sale can be 10% whether that changes next year with the election we will have to see.  If interest rates do go up quite substantially and if the entrepreneurial relief under the capital gains taxes change then I don’t know whether it would still be as favourable.

The market has changed in that we are seeing very little bank funded deals.  Pre-2008 there was a lot of leverage deals; they are just not there now, certainly not in the mid-market.

We are seeing a lot of activity and new entrants into the market such as foreign investors, high-net-worths, business owners.  PE houses are also becoming very dominant in all the deals that we are doing but the banks are just not there.  I think that is the biggest change.

The market right now is a little bit more cautious so deals take a little bit longer to complete than they have done pre-2008/2009.  We see a lot more due diligence being undertaken by buyers.

We do not see any particular sector driving the market.  There are a lot of real estate driven corporate deals but they are just one of the sectors that are particularly active right now.  Betting and gaming, mining and natural resources, recruitment, manufacturing even.  Years ago we didn’t see a lot of manufacturing deals; we have a few deals on now – UK manufacturing businesses being sold.  Quote 7

In our view the mid-market is driving the UK economy and constitutes young, dynamic, entrepreneurial business owners and sources of wealth and hopefully that will continue into the future.

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Nick Davis
Partner, Head of Corporate, Mishcon de Reya

Nick is a Partner and Head of the Corporate Department where he is an expert in M&A, reorganisation and restructuring and business law. His work embraces a wide range of industries including recruitment, finance, technology and property services, and a wide range of business types from entrepreneurs to international corporations. It is in recruitment, however, that Nick forged a particular reputation.