Clearwater has seen strong performance in the last 12 months and predicts a continued uptick in activity, with cautious optimism that deal conditions will improve in 2024.
Encouragingly, despite UK corporate transactions falling by around 10%¹ in the last twelve months, Clearwater’s UK team delivered 49 deals with a combined transaction value of over £2bn in 2023. Moving ahead in 2024, the firm have a record number of sell-side mandates to complete and an expectation to launch a significant number more throughout the year.
Mark Taylor, Clearwater’s UK CEO, said: “The last 12-18 months have been challenging. We have seen increases in inflation and interest rates, as well as ongoing global uncertainty, which has made the whole market a little more cautious when deploying capital. Despite this, our team have remained highly active and have continued to provide balanced and quality advice to our clients. This, along with our strong regional coverage, has definitely helped drive the number of transactions we have successfully completed.”
Sarah Taylor, Partner and Head of the Midlands, added further: “The M&A market has been challenging over the last year, but strategic trade are still interested in acquiring quality businesses and there is still a significant amount of capital out there left to deploy. These tighter market conditions have played to our strengths in understanding the challenges that the market is experiencing, allowing us to deliver tailor-made processes, aligned to the needs of the businesses we are working with. Given these circumstances, our focus towards approaching investors and buyers has naturally shifted, but the end result to serve our clients in the best way possible remains the same.”
"Clearwater’s UK team delivered 49 deals valued at £2bn in 2023"
As a result, Clearwater suggests now is the time for businesses to be thinking about their strategy regarding funding, acquisitions and exits. “As market conditions begin to improve, every business needs to consider if and how it should capitalise on this. For some, this will mean refinancing with more suitable financing structures or pursuing acquisitions and ensuring the funding is in place. For others there could be an opportunity to take some cash off the table and invest more in the business for growth, or consider the option to exit,” suggests Mark.
Clearwater has built a business with a resistant framework, prioritising local coverage and sector specialism with a formidable international network to support its clients. The firm is regionally based across four major UK cities, which means it is close to both the businesses it advises, as well as the funders and the wider professional community involved in a transaction.
Within the debt markets, it was reported in Clearwater’s 2024 Debt Advisory Lender Survey that 60% of lenders reported a reduction in leverage appetite over the last twelve months², this is in line with the team’s experience in all but the strongest credit stories, where they have seen leverage levels hold up.
However, these headwinds are slowing with interest rates decreasing and inflation now reduced from a high of 9.1% in the 12 months to December 2022 to 7.3% for 2023³. Forward-looking rates are predicted to fall by 60bps⁴ before the end of the year. “The appetite to lend money has materially increased over the last few months. Lenders are keen to support new investments and refinance portfolio businesses. In the last few months, we have completed a number of refinances for private equity-backed businesses with debt structures that were almost impossible to achieve 12 months ago,” reports Simon Chambers, Clearwater Head of Debt Advisory, UK.
"Tighter market conditions have played to our strengths in understanding the challenges that the market is experiencing"
Mark, comments: “We deliver our advice through our sector experts who are spread across our regional offices throughout the UK and Europe. We are strategically placed to deliver advice across a full suite of services to support and nurture businesses as they grow, working with entrepreneurial businesses, providing sector-led M&A advice, as well as having a debt advisory team that can source a wide range of debt solutions for clients. Additionally, supporting our whole business is our financial modelling and data analytics team and ESG advisory practice, which are both vital services to ensure our clients are transaction-ready. We have genuine international reach through our offices across Europe, as well as our partnership with KeyBanc Capital Markets in the US.”
During 2023, Clearwater made several senior appointments across its team, which helped bolster its regional coverage across the UK and Europe.
- Based in Leeds, Partner Greg Cant joined the team to head up the firm’s Financial Services sector
- Within the Manchester team, Ed Gale was promoted to Partner in the TMT team to further enhance Clearwater’s services within the technology space
- At Director level, Andy Battersby joined the Manchester team to support the UK’s growing Business Services sector. Whilst in London, Directors Charlotte Astleford joined the Consumer team and Patrick Irwin joined the dedicated Private Equity team to bolster Clearwater’s growing sponsorship coverage
To support owner-managed growing businesses, Partners Richard Goldsack and Joe Dyke, based in Leeds and Birmingham respectively, are leading a team to support clients with their exit strategies, capital raising, and investment opportunities.
"Lenders are keen to support new investments and refinance portfolio businesses"
Clearwater’s regional expertise has been recognised at a number of local awards, with the UK team receiving the following in 2023:
- Corporate Finance Advisory Team of the Year of the Year at the Midlands Insider Dealmakers
- Corporate Finance Advisory Team of the Year at the East Midlands Insider Dealmakers
- Large Business Corporate Finance Team of the Year at the North West Insider Dealmakers
- Corporate Finance Team of the Year at the Business Desk North West Rainmakers
Mark, added: “Our teams are structured across the UK to focus on delivering quality advice to our clients. We have established connections with our local professional community and our regional presence enables us to identify local growth opportunities in the mid-market. We have a healthy WIP ahead, with an order book of transactions to complete that is 19% higher than 12 months ago and 22% higher than it was two years ago, enabling us to unlock more opportunities for our clients, by combining our deep sector knowledge, international reach and, importantly, local coverage.”
¹ Mergermarket mid-market UK transactions, deal values of £10-400m where available (February 2023-2024)
² Clearwater International Debt Advisory 2024 Lender Survey
³ https://www.ons.gov.uk/economy...
⁴Chatham Financial, daily SONIA rate (28 February 2024) and 3-month SONIA forward curve (02 December 2024) https://chathamdirect.com/rates
Additionally, the firm launched its bespoke UK-wide ESG advisory service, where clients can benefit from a 360-health check of their ESG strategy, comprehensive risk and opportunity analysis, plus guidance based on investor and market expectations.
PE continues to be a critical element of the business, and a key focus area for growth, both in the UK and internationally. In 2023, Clearwater worked with clients based across the UK who were seeking investors for their business. Some of these transactions include advising Manchester-based Apadmi on its investment from CBPE, advising Leeds-based Fruition IT on its investment from Erisbeg, and advising Midlands-based We Are Digital on raising funds from Impact Partners.
