Buyouts make strong return
MANAGEMENT buyouts are fuelling a strong end to a busy year for acquisitions in the Tees Valley as business leaders rush to beat the capital gains tax deadline.
Chartered accountants Tait Walker, which sealed its 100th deal of the year this week reaching a combined value of more than £50m, said MBOs, which had largely fallen from favour as a means of disposal, had made a storming return.
“Basically, if you need to get rid of the business by April, the quickest way is to sell to the management,” said Tees Valley partner Andrew Moorby.
“We are seeing a lot more reconstructions, partial disposals and MBOs.”
The energy sector was attracting interest, particularly from American buyers, who were not deterred by a strong pound, he said.
Tees Valley based specialist pump, valve, seal repair and maintenance company MF Sealing Systems, recently sold to American-based Flowserve for well over £2m. But there had been little Asian money flowing into the region, despite a growing trend for Anglo/Asian partnerships.
“Maybe that’s because it all flows into the South-east and when that’s saturated we’ll see it stretch further north,” said Mr Moorby.
On the other hand, many clients were seeking joint ventures or stand alone investment opportunities in China and India.
“Unfortunately, it’s a means of finding cheap components. We have a lot of clients looking at activity in the Far and Near East, but we haven’t seen a lot of investment coming back the other way,” he said.
Teesside’s strong reputation for niche engineering skills, particularly in the renewable energy sector, was attracting global interest. American financiers had invested substantially in energy-related suppliers over the past year and,
given the government’s recent commitment to renewables, that trend was likely to continue, said Mr Moorby.
“A lot of the activity over the past two or three years has involved niche players in global markets.”
Tait and Walker had 20 deals in the offing, with five due to complete within the next month, said Mr Moorby.
There had also been strong interest in manufacturing, construction and leisure over the third quarter.
In the leisure sector, Tait Walker acted on behalf of the owners of Rockcliffe Hall in the Tees Valley, advising Allied Irish Bank on its funding for the £50m redevelopment into a luxury five-star, 63-bedroom hotel, with spa and golf course.
But property was likely to see a downturn over the next year, he predicted.
“It has been bucking the trend locally, but talking to surveyors recently, they are seeing a distinct down turn. Some will remain buoyant, but I predict others will be a lot quieter.”
Commenting on TW's completion of the 100th deal, corporate finance partner, Michael Smith said: “I am delighted to be reporting on a third quarter that has seen us advise clients across a diverse sector base, some of which are recognised brands in their field in the North-east.
"I do feel we have our finger on the pulse not only when it comes to sourcing funding, but also our ability to assist when organisations are looking to either sell up or acquire other businesses to help with expansion.
“I am confident that the fourth quarter will be equally busy."
