Growth back on the agenda as strategic deals set to increase

The number of mergers and acquisitions is expected to increase in the coming months as businesses look to grow after a sustained period of cost reduction, according to one of the region's corporate finance experts.

Christian Mayo, KPMG's Leeds head of corporate finance, said 2011 would be dominated by deals of a strategic nature, to facilitate growth, with volumes increasing towards 2012.

He said: "I expect 2011 to be the year when growth comes back on the agenda, as the conversations in many of Yorkshire's boardrooms are more positive, after a sustained period of focus almost exclusively on survival, retrenchment and cost reduction."

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He added that acquisitions and non-core divestments will form part of the action plan for a number of businesses in 2011 as management teams ask themselves how to maximise growth in the next cycle, which markets to access and where to invest.

"An acquisition strategy might be the key to making an impact in a new market, enhancing a product offering or growing market share within a static sector," he said. "And some companies will divest of businesses in order to build a fighting fund to make strategic acquisitions."

He added: "Vendors can now sell their business as the funding is available to support transactions, albeit at new norms of lower leveraging and higher cost. The challenge is to recognise that sales need to be handled differently. Far more preparation time needs to be allowed and more work is required, addressed to a more targeted pool of potential buyers."

A recent survey of technology companies by Deloitte found increased optimism in the sector and predicted a more competitive auction market, with a rise in private equity activity, particularly focused on companies serving small-and-medium-sized businesses.