M&A and Private Equity Market Themes report, 2018
We are pleased to share our latest annual M&A and Private Equity Market Themes Report 2018. This year we have teamed up with Howden Insurance Brokers - the largest M&A insurer in Europe, to review all of the M&A and Private Equity transactions we advised on in 2017. We have extracted the data from the 191 transactions we worked on in 2017 and applied our knowledge of M&A and private equity deals to deliver a data driven insight in to current market practice.
The key highlights from the report are:
- 2017 was largely a sellers’ market, typified by sellers securing low caps on their financial liability, and often favourable economic terms on re-investment. This is partly due to the high level of competition for assets and increasing availability of flexible warranty and indemnity insurance solutions for buyers.
- The proportion of deals surveyed this year which were actually executed after a full auction process has fallen. There are, we believe, a combination of reasons for this. Bolt on M&A is captured by our survey results and these transactions are more likely to have resulted from direct origination and, perhaps more interestingly, we have seen a number of buyers pre-empting or breaking auction processes to win prize assets.
- At the same time as we have seen buyers offering higher prices and more favourable economic terms (perhaps to win or avoid an auction process), we have seen buyers seeking to mitigate transaction risk through an increased use of MAC clauses and warranty repetition on split exchange and closing deals.
- Demand for Warranty & Indemnity insurance continue its upward trend, including the largest ever insured transaction with an enterprise value of £10.9 billion.
- Whilst private equity buyers are showing increasing willingness to accept lower levels of financial protection in sale agreements and investment agreements, there has been little movement in the last few years in what private equity investors will accept in respect of good leaver/bad leaver terms – this shows that control over newco equity remains very jealously guarded.
In 2017 Pinsent Masons advised clients on a wide range of M&A transactions, worth over £7.5 billion including on over £3 billion of mid-market private equity transactions. We have been recognised as the M&A Team of the Year 2017 (British Legal Awards), Tier 1 in Private Equity, Legal 500, 2017 and ranked in the top 5 for number of private equity deals completed by a law firm in the UK (The Lawyer). This blend of expertise makes us well placed to report again this year on the M&A and Private Equity trends.
We would be delighted to come and speak to you and your colleagues about this report and our own experience in M&A and Private Equity transactions and latest market developments and opportunities. If this was of interest do let us know and we will arrange a suitable time to do so.