The number of private equity buy and build transactions in the North of England soared by 30 per cent during 2020, as private equity houses looked to bolster their portfolio during the Covid-19 pandemic, according to research by Rickitt Mitchell.

Analysis by the corporate finance boutique, in partnership with Experian Market iQ, reveals that a total of 63 bolt-on transactions were completed involving Northern businesses in 2020 – up from the 48 seen over the course of the previous year.

The North West was the North’s most active region, with a total of 30 transactions in 2020 – third behind London and the South East nationally. Yorkshire saw a total of 25 deals, with the North East completing eight.

The bounce back following the Covid-19 pandemic is highlighted by the active second half of 2020, with 39 transactions completed during that period. In contrast, just eight deals were completed during the second quarter, at the height of the national lockdown.

This picture is mirrored on a national scale, with total volumes rising 35 per cent from 276 in 2019 to 370 this year, with 232 transactions completed in the second half of the year alone.

Over the course of the year, 10 of the 12 UK regions either surpassed or equalled their 2019 totals in 2020. Only the East of England, which saw volume drop from 19 to 17 and the South East, which fell from 39 to 35, saw a reduction in deals.

Despite the rise in volumes, the total value of transactions fell by a small portion over the last year. £1.2bn of deals were completed in 2020, just lower than the £1.3bn seen in 2019, which further highlights the trend of bolt-on deals during this period, which typically have smaller average values than other deal types.

Neil Mitchell, Partner at Rickitt Mitchell, said:

“Bolt-on transactions have been on the rise for some time, however the significant jump in deals during the pandemic has highlighted the continued appetite by private equity for bolt-ons as a route to growth.

“Private equity houses have seen the opportunity to strengthen their existing portfolios even further and capitalise on new trends. For example, with the rise in remote working, we have seen appetite for businesses with digital capabilities explode, as more traditional companies look to add much needed technological expertise. We’ve also seen a wider spread when it comes to pricing, with some companies valuations remaining high while others have taken a hit, providing opportunity to target strategic acquisitions at lower prices.

“As the ‘new normal’ has begun to emerge, we expect both new investments and bolt-on transactions to remain high for the foreseeable future. PE houses are still sitting on large war chests that they need to deploy to satisfy investors, and opportunities will remain for companies to grow dramatically through strategic acquisitions throughout 2021.”

Founded in 1976, Rickitt Mitchell is an independent corporate finance firm based in Manchester. Over the last 45 years, the firm has advised on more than £4bn worth of transactions across all deal types, ranging from £10m to over £100m in value.