In the North East there are a number of sectors that place the region on the national and international map, including technology, manufacturing/engineering and professional service
Within these sectors are several particularly significant regional businesses that are best in class, and which help to shine a light on the North East and make it an area of interest for UK and international investors.
This has been highly evident in our latest financial year, which ended on 31 March 2022, during which RGCF was very active, advising on a recordbreaking 42 M&A transactions. This momentum has continued into the start of the new financial year.
During the year we saw a great deal of M&A activity involving businesses in these sectors as a result of the levels of liquidity in the debt markets and Private Equity investors starting to deploy their ‘dry powder,’ which had accumulated as investors and acquirers bided their time during the height of the COVID-19 pandemic.
RGCF helped a number of businesses secure important funding to scale both organically and through acquisition. This included: the equality, diversity, and inclusion (EDI) consultancy business, eQS, which acquired four businesses during 2021 as part of its buy-and-build strategy; Premier Roof Systems’ acquisition of fellow North East company Classic Windows; and Jarrow-headquartered Wescott Industrial Services’ purchase of Hull-based scaffolding services provider SGS Ltd.
The liquidity in the market also drove an increase in Management Buy Outs (MBOs). The key to a successful MBO is a good business with a quality management team that can access finance, either through equity or debt. MBOs were especially prevalent in 2021, with several large corporates looking to divest non-core areas of their businesses, which created opportunities for management teams.
Among these transactions were high-profile MBOs at Komatsu Mining and Enshore Subsea. A trend that has very much been driven by RGCF, when identifying potential acquirers, is protecting the legacy of a business. Alongside achieving maximum value for the selling shareholders, we want our clients’ businesses to scale once acquired and benefit from further investment. This investment is often secured by attracting overseas trade buyers that are looking for a UK presence and a business that can grow with their support. This was evidenced by Netherlands-based MegaGroup’s acquisition of thermoplastic pipe systems company epco and Swedish investment group Lifco’s purchase of Newcastle-based Specialist Alarm Services, which are both cross border transactions that RGCF led and advised on. Already within the first few weeks of this new financial year these trends have continued, with RGCF advising on several out-of-region transactions, including the sale of Oxford-based proptech business VTUK to LDC backed iamproperty, the sale of Bristol-based Market Dojo to French listed Esker and Gi Group’s acquisition of The Leadership Factory.
All of this activity has helped us grow the RGCF team, which now stands at 23, making us the largest CF boutique in the region, with further growth anticipated with the addition of more highly experienced and talented people over the coming months to provide expert, common sense CF advice to our clients to help them grow and realise the full value and potential of their businesses.
