Markets by Trading view

T1 2022 UK Food and Beverage Sector M&A deal value drops by 85%

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  • Given the long transaction lead times – the impact of food inflationary pressures on deal activity is yet to be seen in M&A activity – current processes are likely to be subject to greater scrutiny of the ability of sellers’ businesses to pass on cost increases;
  • Overseas buyers accounted for 25.0% of deal transactions, down from around one third for 2021;
  • Financial buyers held steady backing around one fifth of transactions with the shortfall made up by an increase in UK based corporate buyers to just over 50.0% of transactions;
  • There was a higher than usual level of activity in the beverage sector with several niche beverage producers changing hands in the period such as Bolney Wines, 40Kola, and Broadway Wine Company;

Mark Lynch, Partner at Oghma Partners, said: “The food & beverage market is never dull, in recent years the challenges have been Brexit, then Covid and now rapid cost inflation across agri-inputs, labour and utilities and as we currently transition into the summer months a cost of living crisis. One final piece in this rather messy jigsaw is liquidity.

It is fair to say that the world has been awash with liquidity as National Bank balance sheets have expanded post the financial crisis and then covid; combined with low interest rates the environment in which to borrow money has been very favourable. Looking into the second half of 2022 reluctant central banks may have to increasingly turn the tap off as they struggle to put the inflation genie back in the bottle. This action could lead to a great challenge financing deals or a higher cost to finance deals – either way it adds another challenge to the M&A outlook.”

About Oghma Partners

Based in London, Oghma Partners is an independent corporate finance advisory firm providing acquisition, divestment, fund-raising and strategy advice to European consumer-focused companies and investors. A ten-strong team, offering a combined track record of over 100 successfully completed deals and award-winning industry research expertise, Oghma Partners is ideally positioned to ensure companies and investors meet their corporate goals. The team includes members with extensive investment banking experienced gained in senior roles at leading global investment banks. Oghma Partners combines the tool kits of the big banks with an old-fashioned focus on the client.

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