Region’s merger values take a hit

Analysis by Experian Corpfin shows a fall to £2.5bn in 2011 from £4.1bn in 2010.

The decrease was driven by a halving in the number of big deals – from 10 to five.

Yorkshire saw the largest percentage fall in deal value of all English regions, but the region’s top advisors warned against reading too much into the figures.

“This region holds its head high,” said Jonathan Procter, a partner at DLA Piper in Leeds. “Our experience is counter to the trend that’s purportedly demonstrated by the figures.”

The UK as a whole saw a 10 per cent rise in the total value of mergers, acquisitions, flotations, rights issues and placements, to £229.4bn against stable volumes, said Experian.

London, the South East and the South West account for the vast majority of deal value, while East Anglia and the Midlands recorded strong increases.

Yorkshire had a marginal increase in deal volume to 315 from 313, but deal value was hit by a 46 per cent fall in large deals to £1.49bn from £2.79bn.

Mid-market deals of less than £100m fell in number to 30 from 36 and in value to £867m from £1.52bn.

Mr Procter, head of corporate at DLA Piper, the leading Yorkshire law firm by volume according to Experian, said many of the region’s advisors worked beyond borders and questioned how the research was put together.

“Increasingly it’s recognised that everyone does international transactions and does work for companies outside the region and does work that would not count as pure Yorkshire deals,” he added.

Mr Procter said: “I don’t see any reason why Yorkshire advisory community has in any way underperformed against other regions.

“Anecdotally, I think that many advisory practices have built strong practices locally that operate both across Yorkshire and beyond. I don’t see any reason for concern or to beat ourselves up.”

He said DLA Piper’s offices in Leeds and Sheffield complete on average around 100 deals a year, of which 30 per cent involve a Yorkshire-based corporate, buyer, seller or investor.

Experian said its analysis was based on whether the target, bidder or parent was located in the region.

The credit information group rated accountancy firm BDO as the most active financial advisor by volume with 10 deals. It also topped the value league table.

Jason Whitworth, corporate finance partner, said that “the volume of big deals has just fallen away”, confirming the research findings, which he blamed on both the lack of funding and confidence.

“Those big leveraged positions have not been available in the market place,” he said.

But he is seeing “momentum” in the small to mid market with deal activity driven by issues like succession planning.

Mr Whitworth predicted that 2012 will be a difficult year for dealmaking but added that “there are still businesses out there performing reasonably well, there are still opportunities for funding available”.

He said banks have become more polarised in their approach to lending.

“If it’s a good business with some good visibility on earnings and it’s not over-leveraged, there’s support. But if it doesn’t tick the boxes it’s a quick no.”

Mr Procter said that some sectors are stronger than others and in those stronger sectors corporates are continuing to do “non life-changing” transactions.

“There are issues around corporate confidence and fear of countries leaving the euro, you cannot dispute this. We have lived under quite a cloud for quite a long time [but] fortune favours the brave. We have seen that over the last couple of years.

“We have seen braver companies continue to build market share nationally and internationally through taking advantage of opportunities that this economic uncertainty brings.”

Experian said there are “good opportunities for investment and growth” across the UK.

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