East Midlands SMEs still on shopping list for European acquirers
- East Midlands SMEs still on shopping list for European acquirers
- Meet the investors who turn local firms into national champions
- East Midlands deals in food, technology, healthcare, marketing and more
Hundreds of East Midlands SMEs have changed hands in the last year, with a mix of local consolidators, international corporations, and institutional investors pumping more than £2bn into the region. Here is a recap of what’s been going on, and what lessons can be learned from recent acquisition trends.
Local healthcare specialists have been actively buying and selling companies in the last year.
The trend for big pharma to outsource drug-testing has helped Quotient Clinical of Nottingham boost sales and margins since securing two rounds of private equity in 2013 and 2015. The Nottingham research group acquired two US contract laboratory firms to take its global headcount from 250 to 600.
Elsewhere, one of the UK’s leading IVF treatment providers The Fertility Partnership acquired Market Harborough-based Ultrasound Direct, a group of 80 ultrasound clinics. Glossop-based REACT Technology, which provides audio technology to help blind people use public transport independently, has been acquired by Danish competitor R2P.
The related social care field is also active, with Leicester adult care provider IBC Healthcare snapping up Forward Day Services in Birmingham, and a Northampton-headquartered group of 17 children’s homes Homes2Inspire sold by G4S to employee-owned education specialist The Prospects Group
The highly fragmented local marketing industry has shown some early signs of consolidation, although, among the £1m-a-year agencies, these deals tend to be amicable mergers rather than takeovers.
Nottingham digital marketing agency Hallam Internet merged with Big Spring to create a £3m-a-year turnover firm. Similarly, Northamptonshire t-shirt printing firm Adlogo was acquired by local rival PCI Truestyle to form a stronger group.
Meanwhile, Leicester graphic design agency Stocks Taylor Benson merged with London firm Shine Design to broaden its service offer and grow its international client base.
Elsewhere in this space, printing company acquisitions have also picked up locally, after a lengthy period of overcapacity.
Nottingham retail software developer Retail Assist, which provides retail chains with real-time inventory management, acquired by Foresight Private Equity. Retail Assist exports to 66 countries – a good example of funding to accelerate internationalisation.
Nottingham B2B reseller Jigsaw 24, backed by Northedge Capital, acquired Root6, which provides storage and server capability for big media formats used in TV and film production.
Nottingham-managed IT services provider Timico secured £50m from Lyceum Capital, while Bowmark Capital has replaced LDC as lead investor in Derby IT services group Node 4, which has been acquiring niche rivals in Nottingham, London and Reading.
Elsewhere, Derby phone and wi-fi supplier Tru Solutions was acquired by TFM Solutions from Buckinghamshire, after the latter secured backing from Santander.
The biggest food deal in the region was Lloyds Development Capital’s investment in sausage roll and pork pie maker Addo Foods. Leicester-based Addo was carved out of Northern Foods in 2007 by Vision Capital, and the deal demonstrates the growing appetite of institutional investors in the regional food industry.
In Wellingborough, Whitworth’s packets of dried fruit have been a staple of the UK’s home-baking revival in recent years, and are increasingly popular in school lunchboxes. Whitworth’s was sold by its private equity backer to Turkish dried fruit exporter Anatolia, in a case clearly underlining the value of searching globally for the right buyer.
And finally, Leicester sports nutritional manufacturer High 5 was sold to Associated British Foods, in a deal advised by BCMS.
Leading importer of American confectionery Innovation Bites owns the UK distribution rights for Twinkies, among others. The firm has acquired Hancock’s Cash and Carry of Loughborough, giving the buyer an effective route to market (Hancock’s has 20 sites and its own label range).
LOCAL DEAL ROUND-UP
Markets with localised supply chains – such as construction – usually create a steady stream of acquirers from neighbouring areas keen to move in and gain a foothold.
FTSE-listed tool hire and workwear group Henry Boot acquired Leicester firm Premier Plant from the founder, and reported that its plant-hire business was delivering a good margin, despite industry pressures.
Elsewhere, Kings Lynn loading bay-equipment supplier and fitter Fen Bay Services secured private investment in a deal advised by BCMS that allows the founder to stay on and accelerate growth of its environmentally friendly range of products (EcoBay).
Finally, specialist engineering skills remain perennially in demand, and the East Midlands is a rich seam for international acquirers. For example, Chinese aerospace and mining group Shaanxi Ligeance bought Derby’s Gardner Aerospace, which makes, tests and repairs metal aircraft parts, for £326m, providing an exit for its private equity backer.
A huge range of buyers are in acquisition mode currently, and looking for businesses of all sizes. As can be seen, SMEs at the smaller end of the scale can add value with a local tie-up to build market share. Further up the ‘food chain’, the profile of buyers changes to private equity and multinationals.
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