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After a strong first quarter, Jim Keeling of corporate finance advisor Corbett Keeling finds that deal activity remained robust in the second quarter as the European market enjoyed a clear pick-up in the first half compared with the same period of 2016. He also draws on the evidence of his firm’s latest survey in taking the pulse of the market.
Deal making activity in the second quarter of 2017 broadly matched the levels of the first quarter. Despite all the negative press about the start of Brexit negotiations, the concrete facts in the market place were the strengthening economic backdrop in Europe and a 33% increase in the value of deals done in the European market as a whole, relative to the first half of 2016. Encouragingly, deal making remained consistently strong both across market segments and over each of the three months in the second quarter.
Of course, the result of the General Election cast something of a shadow over the market towards the end of the period. At the very least, it appears to weaken the government’s hand for the Brexit negotiations. And Jeremy Corbyn’s rebound in popularity, while it lasts, has also made more realistic the prospect of a less business-friendly government further down the line. However, on the ground, we see plenty of market participants looking to put money to work, including overseas buyers seeking to take advantage of the weaker pound. That has to be good news for company directors planning to sell their businesses.
So what were the actual figures for deal making in the second quarter of the year?
All equity buy-outs remain in the doldrums. There were only two all equity buy-outs in the second quarter, down from four in the first three months of the year. This was the second-highest six-month total for five years, reflecting the continued availability and attractive pricing of debt.
So, in summary, we are encouraged by the hard data for the first quarter, which reveals a very healthy level of deal making activity. But what do the survey responses tell us of the current mood in the market? Our latest survey was conducted in the aftermath of the General Election and not surprisingly reflected the resulting uncertainty over the policy outlook.
E-mail: Jim.Keeling@corbettkeeling.com