2019 Market Reflection

BLOG14th Jan 2020

Despite some positives it would be a fair assessment to note that deal making in 2019 has been somewhat of a challenge. However, as is widely known, when markets are in a state of uncertainty this can present opportunities, and this appears to be the case for non-UK headquartered, often well-funded, strategic acquirers who see Scottish based businesses as key targets.  

From our own experiences, it is little surprise that the levels of interest are increasing, after all, given the current political headwinds and the knock-on impacts on trading, business owners are perhaps more open to an approach subject to better understanding the commercial rationale and objectives from an interested party. 

From an acquirer’s perspective, it seems there is almost a perfect storm given the current trading confidence and perhaps catching business owners at the right time for them to entertain the prospect of transacting. In addition, the relatively stable oil price and improving confidence in the energy sector coupled with the fall in the value of sterling certainly makes opportunities more favourable.  

Interestingly, this is not confined to any specific market or sector. There have been a number of high-profile transactions involving energy businesses with the likes of Norwegian based DNO and Waldorf Energy acquiring the AIM listed Faroe Petroleum and Endeavour Energy’s UK assets respectively.  

From an oilfield services perspective, US headquartered, SCF backed asset rental business, Centurion Group recent acquisition of Aberdeen based filtration equipment company Osprey 3 together with Dutch based manpower and recruitment business Atlas Professionals expanding their UK presence through the strategic acquisition of drilling recruitment expert, Brander.  

The purchase of Alexander Dennis, one of the UK’s largest manufacturers of transport buses by US based NFI Group, a large North American bus manufacturer for £320m in May was soon followed by the Faroese based salmon producer P/F Bakkafrost acquiring The Scottish Salmon Company for £516m in September.  

From discussions with clients, prospect and fellow advisors, there is a sense that this trend shall continue should the current political and market challenges remain. However, there is light at the end of the deal making tunnel; it’s just how long the tunnel is that will determine if 2020 is to be a success.   

By Callum Gray, Corporate Finance Director at AAB.

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