North deals market thriving despite the credit crunch
Dec 10 2008 The Journal
Despite continued uncertainty in the financial markets, there are plenty of deals being done in the North East, as commercial law firm Muckle LLP is proving.
Muckle LLP partner and head of commercial services group Robert Phillips said: “The credit crunch has obviously caused immense uncertainty. However, our experience is that that has largely been an issue on a macroeconomic level and has not impacted on the level of activity we are seeing here in the region. The people we deal with have been getting on with their business lives and have not allowed the dramatic headlines to distract them.
“There is a wide variety of deals being done across all sectors and many of these deals have involved banking debt, demonstrating that, for the right sort of deal in any sector, finance is available.
“We had a great October and now find that the level of activity is continuing into November and December. With more deals in the pipeline, there’s lots going on and plenty of opportunities. It would be foolhardy to predict what will happen next year, but we have a great base to build on.”
Muckle LLP’s experience is reinforced by Brewin Dolphin Investment Banking. Brewin Dolphin, which is a leading adviser to UK small and mid cap companies and is headquartered in Newcastle, is also seeing encouraging activity.
Brewin Dolphin Investment Banking’s head of corporate financial advisory team Matt Davis said: “With all the current media coverage one could be forgiven for thinking that life, as we know it, has come to end for companies and professional advisers both big and small. The truth is that while the current credit squeeze is impacting an ever-increasing number of businesses, and in particular those with high debt burdens to service or with leverage to refinance, there are other organisations that continue to grow seemingly unaffected.
“Those companies, which have sound balance sheets, are cash generative or able to present a strong recession insulated investment case, will continue to have access to the capital necessary to expand and grow. Indeed, the current market conditions provide significant acquisition opportunities for those companies with capital as they take advantage of the falling valuation expectations of less well capitalised vendors.
“While in global or national terms M&A statistics will point to a slow down or even suspension of activity, Muckle LLP’s deal track record for October reinforces the fact that quality companies receiving quality advice will continue to deal. Activity levels at Brewin Dolphin are also currently high as companies are increasingly turning to advisers who are able to offer integrated debt and equity funding solutions and able to provide high quality, results orientated M&A advice.”
The record October performance highlights the strength of Muckle LLP’s commercial team. This was further emphasised in September when the firm scooped major awards in the North East Insider Dealmaker Awards.
At the dinner, held at the Gosforth Marriott on September 11, Muckle LLP was named Corporate Law Firm of the Year. The awards, voted on by the North East corporate finance community, saw Robert Phillips named Corporate Lawyer of the Year. This is the second consecutive year in which a partner from the firm has taken the title, which last year went to Andrew Davison.
This year’s awards also saw success for associate Craig Swinhoe, who was voted Young Dealmaker of the Year.
Managing partner Stephen McNicol said: “This is real measure of the progress that the firm continues to make and of our growing reputation and presence in the North East.
“While the awards acknowledged our success in the corporate finance market, it is very important that the contribution that all other parts of the business make to the corporate transactions that we work on is not underestimated. These are absolutely critical to delivering the levels of service that these awards have recognised so strongly and I, together with everyone in the business, am rightly proud of our achievements.”
One major October deal was the sale of specialist software provider Imass to Astrium, a subsidiary of EADS – a global leader in aerospace, defence and related services, with annual revenues of 39bn (£33bn) and more than 116,000 staff.
Imass, which employs 136 people, was acquired by Infoterra, part of the Earth Observation Division of Astrium Services. The business will continue to be run from its current base in Newcastle.
Imass was originally part of Northumbrian Water until it changed hands in a MBO in 2002. The company provides software for the UK public safety, manufacturing, design and utility markets, as well as supplying software for functions such as billing and computer aided design.
Imass started looking for a buyer which could help it exploit international markets 12 months ago.
“We were very selective, as we were looking for a partner who would help develop our capabilities in the UK, as well as help to deliver our solutions to the global market,” said Mr Hudspith. During the lengthy negotiations, Imass was advised by Muckle LLP, which also advised the management team in its original buy-out.
Mr Hudspith added: “The process of the deal was made fairly straightforward and Muckle gave us an excellent service.”
Muckle LLP partner Peter Robinson said: “This is a great success story. Imass is an excellent company which has prospered since its MBO. It is good to have worked with them during their years of growth and to now help them move to the next stage, which brings the company and its workforce great opportunities.”
Another deal that Muckle LLP provided its legal expertise for involved the acquisition of Peerless Systems by Whiteley Murphy, also based in Washington. Whiteley Murphy also owns Orwin Limited, which designs and manufactures bespoke assembly systems and process equipment. Orwin, which was bought by Whiteley Murphy in 2004, has 53 employees and an annual turnover of about £4m. Peerless, has annual sales of about £400,000.
Discussions began in February and Whiteley Murphy realised it had found the ideal fit for Orwin, with both companies performing similar roles but in different sectors. Orwin finance director Michael Cook said: “Orwin has expanded considerably over the past couple of years, but there are still sectors out there where we are unknown, so Peerless, being in different markets, gives us great opportunities.”
Craig Swinhoe, who led the team, said: “For the Muckle LLP corporate finance team this deal provides further evidence that, despite the current economic climate, deals are still being done and are backed by local finance providers, with, in this case, NEL Evolve providing funding and Bank of Scotland, working capital facilities.”
Mr Cook added: “We are still on the lookout for other acquisitions and we are talking to another business of a similar size to Orwin with similar products and capabilities but with different markets.”
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