M&A activity across Q2 2020 experienced its worst quarter in over a decade as many transactions ended up postponed or abandoned as the world began to weigh up the impacts of the COVID-19 pandemic on economic recovery. With global equity and debt markets faltering throughout Q2 2020 liquidity and shoring-up balance sheets has become a key focus for many with market sentiment on economic recovery still low. From a transaction perspective this has often resulted in the altering of deal structures towards ‘earn-outs’ with buyers not comfortable parting with much needed cash reserves on completion.
Despite the challenges in Q2 2020 we have still seen a number of key deals across the quarter including cybersecurity specialist Beeks Financial Cloud’s acquisition of Velocimetrics for £1.3m and Malaysian-listed engineering specialist Serba Dinamik’s acquisition of Aberdeen-based Wellahead Engineering, establishing a strategic base in the North East for Serba.
Elsewhere, Bluewater Energy backed and leading operations & maintenance specialist PX Group acquired NRG Well Management, a provider of project management solutions
to the upstream oil & gas industry. The deal extends PX Group’s capabilities to the full upstream asset lifecycle.
Fund-raising activity in Q2 2020 has seen a gradual recovery with a number of stand-out fundraising transactions closing, including edible seaweed product manufacturer SHORE successfully raising £1.7m from the Scottish Investment Bank (SIB). A stellar deal during the quarter was leading subsea clean energy specialist EC-OG’s successful £1.6m raise from Par Equity.
As we head into Q3 2020 we expect to see continued appetite from Private Equity (PE) backers to deploy capital into resilient tech, healthcare and business services firms where the recurring nature of the trade has been largely unaffected by COVID-19 and proving attractive to PE funds with significant capital to deploy.
The removal of government lockdown measures is the first step in beginning to re-build the economy, however we will continue to face difficulties as we all begin to adapt to the new normal, please do know that we are here to offer guidance and support as your circumstances may change. Please do get in touch if we can be of assistance through this very challenging period for all of us.