The third quarter of the year 2023 has seen an increase in the volume of deals (46 transactions) compared to the same period in the prior year (up 91.7%), according to corporate finance house Oghma Partners. Deal value has also increased by about 5.0% to GBP1,230.0m compared to the same period the prior year.
75.0% of deals in 2023 had an estimated value of GBP10.0m or less, up from approximately 69.0% of deals in 2022. Both 2022 and 2023 experienced a high volume of low value deals compared to the five-year average between 2017-2021 (c. 57.0%).
Only about 8.0% of transactions were estimated to be above the GBP50.0m mark in 2023, falling well below the five-year historic average of 15.0%. Overseas buyers were responsible for 23.3% of deal volume in 2023, which is slightly down from 27.4% of deal volume in 2022, and the historic 5-year average of 29.0%.
Financial buyers accounted for 19.0% of the deal volume in 2023, up from 13.7% in 2022 and higher than the five-year average of circa 17.0%. Beverages was the most active category for 2023, withabout 80.0% of beverage deals having an estimated value below GBP 10.0m, with a large number of small beer producers make up the volume of beverage deals. 25.0% of deals acquired out of administration were beer producers, following an oversaturated market and an intense period of cost inflation, according to Oghma Partners.
“The key issues that impacted M&A in 2022 dragged over into the start of 2023 with inflationary cost pressures, the cost of living crisis and the increased cost of debt suppressing the higher value deals in the first half of the year (with the exception of the Glanbia Cheese acquisition),” explained
Mark Lynch, partner at Oghma Partners. “However, deal volume increased compared to 2022, 116 deals for 2023 (an increase of 57.0%). We believe that this increase in activity in part reflected pent up seller activity and, in addition, the sad bonus of a large numbers of businesses acquired out of administration (c. 10.0%). UK plant-based companies have particularly struggled in 2023, with three notable businesses being acquired out of administration. In June, Vegan Food Group (formerly known as VFC) acquired Meatless Farm, in July Vbites acquired Plant and Bean, and in December it was announced Vbites had gone into administration. It hasn’t just been the smaller players struggling, in August Beyond Meat sales had fallen by almost a third over the previous three months, Heck announced in May it was slashing its range of meat-free products from ten to 2, Pret a Manger has closed half of its vegetarian and vegan only outlets, Nestle axed its Garden Gourmet plant-based vegan brand in the UK and LoveSeitan collapsed in August. The meat free industry has faced a triple whammy – a cost of living crisis turning consumers away from higher cost meat-free products, cost inflation and much reduced investor appetite to provide follow-on funding.”
Based in London, Oghma Partners is an independent corporate finance advisory firm providing acquisition, divestment, fund-raising and strategy advice to European consumer-focused companies and investors.
Find out more at: http://www.oghmapartners.com/