PE acquisitions continue to reach record levels in 2021

The number of acquisitions made by private equity-backed businesses in the UK hit record numbers in H1 2021, with 286 transactions completed during the first six months of the year, according to Rickitt Mitchell’s Buy and Build Barometer.

The latest analysis from the corporate finance firm, conducted in partnership with Experian Market iQ, reveals that bolt-on transactions are more than double that of the corresponding period in H1 2020 (137) and 23 per cent more than H2 2020 (233).

In Q2 2021 however, there was a slight drop in deals compared to the first quarter of the year, with 118 and 168 transactions completed respectively.

On a local level, the majority of regions have seen a drop in private equity bolt-ons in the last quarter, with deals in London and the East of England falling by more than half in Q2 2021.

In contrast, Yorkshire saw a 22 per cent rise in completed transactions during this period.

The figures from the Buy and Build Barometer suggest that the deals completing are smaller bolt-ons in the latter part of H1 2021, with the overall value of transactions dropping from £2.1 billion in Q1 to £163m in Q2. That said, the year-to-date value as a whole is over 12 times more than the same period in 2020, when the Covid pandemic first began.

This figure was aided by multinational energy and services company Centrica’s sale of its Peterborough site to Whitetower Holdings UK Limited for a consideration of £20m in June 2021, and waste giant Biffa’s acquisition of Viridor Waste Management’s collection business for circa £126m in May.

Bristol-based veterinary practice backed by EQT, Independent Vetcare Limited, continued its acquisition spree this quarter, taking its total number of cross-border bolt-on acquisitions this year to 64 – 43 per cent of which happened in Q2. Additionally, London-based insurance brokerage provider Aston Lark, Bowmark Capital backed, made seven acquisitions of firms across the South of England and Republic of Ireland.

Neil Mitchell, Partner at Rickitt Mitchell, said: “It is safe to say that 2021 has surpassed all expectations of dealmaking. We have continued to see record levels of activity by private equity-backed businesses and the market has recovered quicker than many thought was possible. That said, we have seen a shift in trends of where and how businesses are making acquisitions, with many happening outside of London.

“Q2 2021 saw a slight slowdown in deals, which is understandable given the sheer volume that completed in Q1 as the market bounced back. However, compared to previous years the volume and value of bolt-on transactions is still at record levels. We expect this high level of activity to be maintained as the deal making environment becomes more fertile than ever, with PE houses continuing to remain, on the whole, supportive of their portfolio companies making acquisitions, aided by high levels of liquidity”