BDO Market Update

Q1-2021

Welcome to the quarter 1 edition of BDO’s Corporate Finance market and deals update. The flurry of transactions towards the end of last year continued into the first quarter of 2021. This was driven in part by anticipated Capital Gains Tax (CGT) changes, as well as the enormous levels of capital looking for a return, and the positive market reactions to the rollout of the COVID-19 vaccinations. We are already seeing a strong pipeline of completed transactions lined up for Q2-21, in particular within the Capital Markets, with increased demand for IPOs. We take a closer look at BDO transactions across the UK in Q1-21 and analyse to see which sectors were more active and in which regions.

Recent market activity

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Northern

BDO completed 112 transactions (£5.8bn in value) in Q1-21, up on Q1-20 by 64%. While 55% of them were cross-border transactions, private equity accounted for 67% of all our transactions this quarter - nearly double that of Q1-20. Our most active sectors remain Real Estate and Technology & Media. While transactions for the latter (by volume) continued at a fairly constant pace over the last two quarters, Real Estate has seen increased quarter-on-quarter figures - not only against Q1-20 but since Q3-20.

midlands and east anglia

southern

LIST OF DEALS

50 Transactions completed in the South Q1-21, a 61% increase compared to the same period last year.

In keeping with 2020, Technology & Media was the most active sector by volume and Real Estate by value. However, there was a noted increase in Life Sciences, Pharma & Biotech transactions as well as Retail & Consumer. This differs somewhat to Q1-20 where Technology & Media - although dominant - was less so and Financial Services was the second most active sector.

46% of all transactions (by volume) in the South involved Private Equity, a 76% increase on Q1-20. PE sector activity is particularly focused on Professional Services, Retail & Consumer and Technology & Media in the South.

46%

DEAL ACTIVITY

Fundraise for Tritax EuroBox plc Equity fundraise by Supermarket Income REIT plc Placing and admission of HSS Hire Group plc Sale of transcript to Palatine Impact Sale of T Shirt & Sons to Polyconcept Recapitalising LDC portfolio company Aker Systems Ltd, a fast-growing technology business Acquisition of Optibrium by Kester Capital Sale of Prescient Healthcare to Bridgepoint Development Capital Sale of Orbus Software to Silvertree Equity

SOUTHERN REGION

Sector focus Manufacturing

Technical insight and features Working Capital

Market insights

Catch up on our latest reports, articles and case studies in this market insights section.

Market activity

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REPORTS AND INSIGHTS

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HORIZONS Q1 2021

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ARTICLES

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We review a selection of key deals which took place for Capital Markets, Mergers & Acquisitions, Private Equity and Business Restructuring.

Technical update

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Click the to learn more about Q1-21 market activity in each region

With many businesses opening up following the 3rd national lockdown, within the context of the increased transactional activity we are currently observing, it is especially important to pay close attention to working capital. Working capital is critical to a business’ survival but also typically impacts the equity value in a transaction. We take a look at how the price of a business can be adjusted down if there is a lower than ‘normal’ level of working capital and provide tools and resources to assist and guide you further.

Make UK/BDO Manufacturing Outlook Report Manufacturing: from stress to value realisation - implementing a successful business turnaround M&A activity in Manufacturing is at record levels...why? Manufacturing Deals Review 2020

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LIST OF DEALS

DEAL ACTIVITY

The Midlands and East Anglia saw a 70% increase in transactions compared to the same time last year with 46 deals completing in Q1-21

Industrials, Business Services and Healthcare accounted for the bulk of sector activity in this region. By contrast, in Q1-20, we saw more Financial Services and Business Services activity.

91% of all transactions (by volume) involved Private Equity, a 100% increase for the same quarter last year. As with transactions, Industrials, Business Services and Healthcare sectors accounted for the bulk of PE activity in this region.

91%

Sale of Prolectric Services Limited to Hill & Smith Holdings PLC Sale of Mikrofill to Stuart Turner (Backed by LDC) Sale of Mar Risk Services Limited to Costero Holdings Secondary buy-out of Agilitas IT by Perwyn Sale of QMI Door Solutions to HLD Group Acquisition of IFC Group by Kiwa UK

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MIDLANDS AND EAST ANGLIA

Our Northern region saw a 45% increase in transactions compared to the same period last year.

Generally diverse in sector activity, Q1-21 saw Technology & Media lead transactions in the North, followed equally by Healthcare & Education and Retail & Consumer sectors. Compared to Q1-20, Retail & Consumer stands out as having seen increased deal activity.

Private Equity-led transactions account for 63% of all activity in the North. This is up 250% on 2020’s PE involved transactions for the same quarter last year. Technology & Media accounts for 40% of the PE activity in this region.

63%

Acquisition of David Hathaway Holdings Limited by Urban Logistics REIT plc AIM IPO of Supreme plc IPO of In The Style plc Investment in eLearning services company Omniplex (Group) Limited by LDC Investment in Prime Global by LLCP Acquisition of Redspire by Incremental Group Acquisition of First King Properties Limited Acquisition of Burnley Football Club by ALK Capital Investment in Whyte Bikes Limited by Cairngorm Capital Investment in SelectScience by Vespa Capital

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LIST OF DEALS

DEAL ACTIVITY

NORTHERN REGION

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TECHNICAL INSIGHT

SECTOR FOCUS

MARKET INSIGHTS

case studies

Case studies

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Latest figures from our Make UK/BDO Q1 Manufacturing Outlook 2021 survey confirm optimism within UK manufacturing is rising, much like we are seeing in the markets as a whole. However, despite the positivity and growth in output and orders, the ongoing impact of COVID-19 and leaving the EU continues to pose challenges for the sector - impacting exports and investment, delays in the supply chain and rising inflationary pressures. We bring together a selection of articles and reports from our national manufacturing team which take a look at the key business issues and trends in this sector.

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