transactional mid-market space

In the below article, Howard Kennedy’s Head of Corporate, Ashley Reeback, reflects on the transactional mid-market space over the last year.


16TH MARCH 2020 – the Prime Minister’s announcement that afternoon that people should “work from home if they can” signaled the pausing of office life as we all knew it in the UK. Following that guidance, and the subsequent lockdowns, almost all of our transactional teams have now worked exclusively from home for one year.  Here are some reflections on the year that has gone by and our experience of doing transactions in the new “virtual” world into which we have been propelled.


LATE MARCH 2020 – Howard Kennedy was in a fortunate position following a firmwide laptop rollout during 2018 and 2019. Most of our lawyers and many of our business services teams had already been embracing the remote working that we had sought to enable. Foresight had resulted in a stress-test of our business systems in late 2019, so when the whole office logged onto the system from home on 17th March 2020 there was minimum disruption. Indeed, our motto was “Business as usual – just not in the usual place”. By the end of March, for example, the M&A team had completed its first remote deal, a company acquisition for an AIM-listed client, albeit we had still used the “virtual” signing protocol, involving wet ink and scanned documents.


SPRING/EARLY SUMMER 2020 – during spring and early summer as remote working continued, we completed several pipeline deals, the majority of which had begun pre-pandemic. In doing so, we became yet more adept in using facilitative technology (Microsoft Teams, Zoom, DocuSign, Hubshare, to name a few).  However, different due diligence issues began to emerge, with the challenges of no face-to-face meetings or site visits and a fast evolving government support programme as the implications of furlough, various government loan schemes and the resultant tax/cashflow effects were then factored into target businesses. The impact of the pandemic then began to be reflected in our transaction documentation – should MAC clauses be utilised – and in valuations.  Furthermore we began to see a move to “back-ending” consideration mechanics – buyers wanted to pay less up-front, with more consideration payable based on earn-outs and adjustments around pre-COVID valuations in particular.


OCTOBER 2020 – after a quieter spell in late summer, the deal flow picked up again with a vengeance as we saw a flurry of mid-market transactions, often with overseas buyers, mainly from the US.  There was a significant amount of activity in the sub-£50 million deal market, as we acted on several acquisitions and disposals in a broad range of sectors including estate agencies, manufacturing and corporate real estate.  We then saw the emergence of a small number of pre-pack deals, and we anticipate more will follow in the coming months of 2021 once government support is reduced, as the pressures mount on businesses which have taken on significant amounts of debt.


DECEMBER 2020 ONWARDS – we saw an uptick in acquisition activity, with a key driver being capital gains tax changes, rumoured at one point to be landing in March 2021, and fundraisings.  As a result, business owners who were in a position to do so brought forward sales of their businesses in anticipation of these possible changes.


WHERE ARE WE NOW – we have continued to see significant activity in the mid-market throughout the winter and foresee this will continue, and indeed will likely increase, throughout spring/summer of 2021.


Our experiences have highlighted the value of agility and demonstrated that, in terms of efficiency and productivity, we can not only meet our clients’ needs, but partner with them as they rise to the challenges of the post-Covid recovery phase.