There seems to remain a wall of liquidity available in the market from various funding sources including private equity and VCTs who are under increasing pressure to put cash out. The involvement of non-PE funders is increasing with family offices, high net worth individuals and mezzanine debt funds having a large amount of funds to invest. The crowd funding market continues to mature and becoming more mainstream as a funding option for earlier stage businesses.
As a result from liquidity availability, our prediction for 2019 is a continued increase in M&A activity, especially in the TMT sector. Technology M&A levels will remain high in the next few years with particular emphasis on Fintech, machine intelligence and Cybersecurity as inter-related areas driven by further use of mobiles for banking, payment systems and ID authentication. The energy and waste management sector is also likely to observe strong growth in the next few years, boosted by consumer trend for a greener lifestyle and government regulations around the use of recyclable and recycled plastics in the supply chain and the increased responsibility for waste disposal.
There will also be a significant amount of market consolidation in Business Support Sectors such as recruitment and logistics as pricing pressure from customers and wage cost inflation puts pressure on margins pushing medium to large corporates adding scale and restoring earnings through acquisitions and centralising back office functions to reduce the overhead base of the enlarged group.
Continued uncertainty around Brexit and the potential ramifications of “no deal” on 29th March will continue to suppress sterling making acquisitions an attractive strategy for overseas corporates seeking to establish a presence in the UK market. M&A activity within our international network ICFG continues to increase and we are currently working with our partners in Europe and Asia on various mandates both in the UK and globally.