Corporate deal round-up H2 2023

So 2024 has arrived with a bang, and with it the usual influx of lawyers reflecting on the year just gone and making ill-judged predictions on what the upcoming 12 months has in store. Not wanting to miss out, I’ve taken this opportunity to highlight a few pins in the 2024 calendar, and to reflect on what they might mean for the transactional landscape in 2024.  Before that, I hope you’ll indulge me in taking a brief look back at some of our highlights in the second half of 2023 (a larger selection of these deals can be found by clicking here).

In my half year highlight note I felt that sentiment going into the second half of the year was reasonably positive, with activity levels across certain sectors remaining high, despite turbulent economic headwinds. Refreshingly, our Equity Capital Markets team bucked wider market challenges with a variety of acquisitions including advising FTSE 250-listed manufacturer discoverIE on the acquisition of Silvertel, and ASX-listed microbiome pioneer Microba Life Sciences Limited on its acquisition of 100% of the issued share capital of Invivo Clinical Limited. 

Similarly, our work on placings held steady, in contrast to some of the gloomier headlines on London as a listing destination, with particular success in advising Predator Oil & Gas Holdings plc on its placing of New Ordinary Shares to the LSE, raising gross proceeds of £10 million. 

The Q3 ONS M&A statistics, which were published in early December, showed a marked decrease in the number of cross-border M&A transactions (362 down from 479 in the previous quarter) transactions. Against this backdrop we nevertheless continued to see a flow of deals with an international flavour to them – the result of our continues work with colleagues across the world, and with Charles Russell Speechlys’ Global Network firms to deliver these. A particular highlight was our role in advising global engineering firm AtkinsRéalis on the sale of its Scandinavian engineering services business to Systra. 

Our team also benefitted from the consistently strong levels of investment into the technology sector within emerging markets, advising, by way of example, Development Partners International and Verod Capital Management on their strategic investment into Pan African Towers, Nigeria’s leading provider of digital infrastructure. 

Finally, while deal flow across all of our core sectors, including real estate, financial services and technology, remained steady a real high point was in sport, where our specialist team was extremely busy through the second half of the year including in advising Thomas Sandgaard on the sale of Charlton Athletic; a deal which received significant press coverage.

So, turning to the year ahead, here are five things to watch out for in 2024, if only for the pleasure of telling me how wrong I was: 

1. It will be a solid year for mid-market transactional activity (yes that is deliberately vague!). Market conditions are less turbulent than last year; interest rates are stabilising and supply chains have improved significantly, thereby narrowing buyers’ and sellers’ price expectations. While the cost of financing the very largest deals remains high, companies in the mid-market will continue to be an attractive proposition to both trade and financial sponsors, the latter of which had a reported $2.49 trillion of dry powder at the midway point last year.
2. A tricky year ahead for private capital fundraising, but private wealth will increasingly come into play as key sources of institutional money slow down. Private capital fundraising fell to a five-year low in 2023 but one of the big stories at the start of 2024 has been Blackstone Inc.'s successful $1.3 billion raise for its first private equity fund targeting wealthy individuals. Expect more firms to follow this lead and “get creative” when it comes to fundraising.
3. The Spring Budget could set the tone for sell-side deals ahead of polling day. Before we get to the much-vaunted general election, there’s the small matter of the Spring Budget, which has been confirmed for March 6th. Most analysts are expecting this to be a “giving budget”, with a number of tax cuts anticipated. Keep a close eye on dividend and capital gains allowances which are due to be halved from April but which are rumoured to be on hold to align with the government’s current growth agenda. Any cuts to those allowances will almost certainly lead to an acceleration of sell-side deals ahead of elections as entrepreneurs look to cash out, leading me nicely to my next prediction…
4. Despite a number of uncertainties, we will see an increase in management teams and founders selling their businesses. Election years are always characterised by instability - this one particularly so with half the world’s adult population expected to go to the polls – but with the amount of capital available, and investors under increasing pressure to deploy it, expect to see a rise in valuations making selling your business more palatable in 2024 than 2023. Incidentally (and in no way a plug) we acted on a number of such deals in 2023, including in advising  IT managed services firm Zenzero’s management team on its majority acquisition by Macquarie Capital.
5. The general election will be a driver for activity. With the polls currently suggesting a Labour government in what is likely to be an Autumn election, there will be a surge in transaction activity leading up to it as sellers prepare for, amongst other things, potential Capital Gains Tax increases. If you’re interested in what a Labour government might mean for employment law then have a read of this excellent briefing by my colleague Nick Hurley who has taken a close look at the Party’s employment pledges during its October 2023 Conference.

And finally, somewhere in the middle of all this there’s also the European Football Championship. I don’t foresee this having a significant impact on M&A activity (but maybe on productivity), though at this stage I am bullish about England’s chances and can therefore confidently predict an England victory. 

See you for an undoubtedly more subdued update on that at half-year.