RGCF predicts growth in MBO activity for the rest of 2020

The UK could see a rise in the number of Management Buy Outs (MBOs) in the second half of 2020, according to RG Corporate Finance (RGCF).

Part of Newcastle-based advisory firm, Ryecroft Glenton, RGCF has seen an increase in the size and number of transactions during the financial year ending March 31, with a notable rise in MBOs.

This looks set to continue this year as there will be fewer trade acquirers in the market, meaning that businesses hoping to sell will look to incumbent management teams.

Recent MBOs RGCF has worked on include the acquisition of County Durham battery manufacturer, Alexander Technologies Europe, by its management team from US private equity house, Woodside Capital Partners.

The MBO was part-funded by a £9.2 million unitranche facility provided by Shard Credit Partners.

Another MBO advised on by RGCF was the acquisition of a power generation and aerospace solutions division of a multinational company by its North East-based management team to create GadCap Technical Solutions.

To meet the growing demand for its advisory services, RGCF has continued to recruit, with a number of significant appointments announced in the past six months including the appointment of corporate finance senior manager Rhiannon Nightingale, corporate finance manager Connor McBride and corporate finance assistant Ben Kain.

Carl Swansbury, partner and head of corporate finance at RGCF, said: “We have delivered another strong year, further strengthening our position as a leading corporate finance boutique, advising on transactions across all industry sectors in the £5 to £50 million equity value range.

“The market for MBOs has grown considerably and we expect that to continue throughout the rest of this year and into 2021.

“With fewer trade acquirers in the market, both privately owned businesses and large UK and overseas corporates are looking to sell businesses to incumbent management teams that are keen to take control of their own destinies and deliver scale to their operations.

“With the level of liquidity in the market, largely from debt funds and private equity houses, this is a great time for management teams to consider acquiring the businesses they run, via an MBO.”