Sale opportunity despite slump

Feb 26 2008 by Sue Scott, Evening Gazette

NORTH-EAST financial experts believe there is ample opportunity for low-value business sales this year, despite a £113m slump in the regional market in 2007.

Research from Barclays Private Equity and Deloitte revealed the value of buy-outs/buy-ins in the region decreased from £308m in 2006 to £195m last year, with deals down from 39 to 19.

But 13 of those deals were valued under £5m and experts believe banks are still willing to fund smaller-scale ventures.

Steve Plaskitt, regional corporate finance partner for chartered accountants Tait Walker, said: “Although the credit crunch will have some effect on deal-making in the North-east, venture capitalists and banks will be prepared to invest in smaller ventures.”

Richard McEvoy, relationship director, Lloyds TSB Corporate Markets, said the first quarter of 2008 was likely to see a flurry of buyout activity at the bottom end of the market.

Jonathan Ward, North of England licence holder for business-for-sale agents Lakey & Co, is completing sales ranging from £25,000 to £400,000 at a rate of more than four a month.

He is now looking to appoint an experienced broker to work alongside him.

Large deals in the region were few and far between last year, but the completion of substantial deals included the £77.8m take-over of Newcastle United.

The credit crunch has affected secondary buy-outs as an exit route for the original purchaser. In quarter four of 2007, there were no secondary buy-outs over £250m in the UK.

Analysts believe it could take several years to generate sufficient funds for larger buy-outs instead of the two to three years which has become the norm.