Q1 2011 Corporate Finance Newsletter

Welcome to Beanstalk's first newsletter of 2011. As one of our valued contacts, you have exclusive access to this digest of the latest news and corporate advisory perspectives from Beanstalk.

In this issue we:

• Discuss trends in the lower mid-market technology sector
• Summarise Beanstalk's recent transactions
  
• Review our shortlisting for the international M&A Awards held in New York
  

We hope you'll find this newsletter relevant, informative and engaging. Let us know what you think and we'll make sure we're covering the news and advice you want to hear about.

Although Beanstalk are advising a number of companies on significant M&A transactions at the moment we are always keen to hear from businesses looking to divest or to raise venture or expansion capital. Our market knowledge combined with our extensive deal experience makes us a must-see port of call for M&A advice.

Finally, if you would like to track us more closely, please follow us on LinkedIn. 

2010 M&A Deals

Our observation of M&A transactions in 2010 are as follows:

• The technology sector attracted a lot of interest in 2010 and we expect this trend to continue in 2011. There are two key areas of note. Firstly, the Cloud is taking pre-eminence especially as larger technology players battle for position and broaden their product offerings. Secondly, mobile data continues to come-of-age with M&A activity being driven by the growth of the smart phone market. In particular, we are seeing increased interest in gaming, mobile payment and advertising based technologies.

• Private equity is increasingly active in the technology market. The reduced deal volume of the last couple of years has increased the pressure on funds needing to exit from current portfolio assets within their investment term. In the last two months Beanstalk has completed two PE-backed transactions.

• In 2010 we also saw a renewed interest from US organisations looking for acquisitions in Europe in order to broaden their client base and provide a truly global offering. The acquisition of  Preview Services by US giant Cintas Corporation, which Beanstalk facilitated, is an excellent example of this trend.

Deal values and pricing metrics are rising - the average deal size was £6.6m in 2010 (transactions less than £50m in the IT sector). So, now is certainly a good time to realise value as quality businesses with a strategic position and scale will be able to attract strong prices. Potential vendors need to use this window of opportunity to attractively position themselves to buyers. The key to giving buyers comfort is educating decision makers in really understanding the dynamics of the business, its growth story and why the business may be selling now. We are also seeing due diligence has become a more onerous process with acquirers looking to probe beneath the financial headlines.

Please do let us know if you would like to talk to us about any of our market insights.

Source: Capital IQ

Recent Deals and 2010 Highlights

In recent months Beanstalk has been involved with the following transactions:

Todd Research Limited - Acquisition By Private Equity Todd Research manufactures X-ray, metal detection and blast suppression equipment. With customers in over 80 countries, Todd Research calls upon a combination of expert market knowledge and excellent product reputation in order to deliver a complete security solution. The acquisition by private equity house Spring Ventures LLP also includes Todd Research's sister business AS Fire & Rescue Equipment Limited for a consideration of £5.25m.

Redeem Ltd - Management Buy-In Redeem is an international leader in the recycling of used mobile phones, print cartridges and other electronic devices with a turnover in excess of £20 million. The MBI team is led by Curt Hopkins and Pete Petrondas who have invested in the deal with backing from private equity investor Trevor Bayley, one of the founding partners of HgCapital, who will be non-executive Chairman.

Each year the Beanstalk team completes around ten transactions. For a detailed description of our deals and an insight into how we work, please view our case studies.

Beanstalk Shortlisted for M&A Award

Beanstalk have been named as one of the finalists in the prestigious international M&A Advisor Awards in the category of Lower Middle Market Deal of the Year.

Beanstalk's co-founder Mathew Byatt commented: "2010 has been an excellent year for Beanstalk - our firm has outperformed our competitors in a challenging market environment. Being selected as a finalist for an international award is recognition of the value we bring to our clients, our unique approach to the lower-mid market and of course the results we have consistently achieved."