What sectors have appealed to investors during the pandemic?


Clearwater International’s latest data on private equity (PE) activity across the UK and Ireland shows that the TMT and business services sectors have proved incredibly resilient during the crisis and continue to attract high valuations.

Both sectors saw high levels of activity in the final quarter (Q4) of 2020, a trend very much reflected within Clearwater’s portfolio of mandates where there were nine business services deals and four TMT transactions completed in the same period.

In terms of volume, the data also shows a marked pick-up in private equity activity towards the end of last year. In Q4 of 2020, there were 78 deals compared with just 36 transactions in Q3 and only 20 at the height of the first national lockdown in Q2. However, it is little surprise that the total number of deals for the year was only 187, the first time the figure has been under 200 since 2016. However, overall deal value did pick up strongly in Q4 of 2020 too, coming in at £16.3bn (€18.8bn) compared to just £4.2bn (€4.9bn) in Q3 and £4.5bn (€5.2bn) in Q2.

Sector strength

What is particularly striking from the data is the strength of the TMT and business services sectors throughout 2020. In Q4 TMT transactions accounted for 29% of activity, while business services accounted for 21%. In Q3 more than a third of the deals were within the TMT space too, while over the whole of 2020 TMT (28%) and business services (21%) accounted for almost half of all transactions, as they did in Q4 too.

Clearwater has also witnessed this noticeable increase in TMT activity which has included a number of highlights this quarter including advising Advanced on its acquisition of Mitrefinch, a global provider of workforce management solutions, and advising Software-as-a-Service (SaaS) digital customer experience provider  SessionCam on its sale to Glassbox Digital, a provider of digital experience analytics for web and mobile applications.


The LTM average quarterly multiple in Q4 was 11.6x across UK PE transactions, rising over the year by one turn of EBITDA from a figure of 10.7 for Q4 2019.

However, the 2020 multiples data masks significant sector variations, with average multiples of 13.6x in TMT and 11.9x in business services. In fact, TMT average multiples were consistently high throughout 2020, reaching 13.5x in both Q2 and Q3.

Considering the Q4 multiples in isolation (i.e. taking out year-on-year averages) the sector differentials are particularly noticeable. In Q4 the average TMT multiple was 12.4x, 12.7x in healthcare, and 12.3x in business services. By contrast, the figure for the consumer sector was just 8.9x, and in food and beverage 10.6x.


Marcus Archer, Managing Partner and Head of Private Equity at Clearwater International, said: “This latest data very much confirms the trends we are seeing within the business, with business services and TMT really leading the way in terms of deal activity right now, and the multiples in these sectors reflecting how these types of businesses are much sought after.

“However, the more general pick-up in deal activity and values in the final quarter is to be welcomed and the early signs are that high activity levels have been sustained during Q1 of 2021 despite the present Page 2 national lockdown. But looking further ahead for the year, we expect the UK market to remain resilient given the wider strength of sectors such as healthcare, technology and business services.”

Mark Taylor, Managing Partner and International Head of Debt Advisory at Clearwater International said: “Importantly, debt appetite to support private equity led transactions has remained high. The breadth of debt providers is much wider than experienced at the time of the global financial crisis and this has definitely assisted with the pick-up in activity we have experienced. We expect this to remain the case specifically in the sectors mentioned.”