PRINTITRESELLER.UK 35 BUSINESS BRIEFING 2024 – not bad, not vintage but certainly robust At the start of 2024 I think many of us had predicted some of the key economic impacts that occurred over the course of the year – Inflation down towards sustainable levels; Interest rates dropping but looking unlikely to return to the near-zero levels of the past few years; and a new government that was likely to implement tax rises. From an M&A perspective, at Knight CF, we have seen confidence continue in the market Overall the channel remained a strong sector for investment, acquisition and funding. However across the sector deal volume has decreased and compared to 2023, deal volume has declined by 20%. We have observed buyers becoming more reserved and selective – but the best companies have continued to attract plenty of interest and overall with 235 deals announced, the market still averages 20 deals per month. Knight CF completed 18 deals over 2024, a good year for us and testament to the strength of the channel but also highlighting the importance of preparation and good advice – the deals that did not happen were likely missing at least one of these factors. We have seen some new buyers which is encouraging, but have also seen a number of parties withdraw to focus on organic growth. There has been a been several cases of debt restructuring, as higher interest rates come home to roost and cases where shareholders have taking a big hit – for example Nasstar and Ridgewall. As a measure of confidence Private Equity investment remains a key measure and 2024 was certainly not vintage in this aspect. The number of private equity transactions reduced by 40% from 49 in 2023 to 29 so far in 2024. We know that there is still enormous interest in investing in the channel, but the cost of debt has impacted valuation and we expect there is a delay whilst pricing expectations normalize between buyers and sellers! There have also been some great successes over the year for example Focus Gorup which started as reseller in the channel achieving an £800m valuation in its most recent investment. So…. What will 2025 bring? The increase in National Insurance will hurt profits and the increase in capital gains tax will impact shareholder returns. However we have not noticed a dramatic shift in either shareholder or buyer behavior from this. There is plenty for shareholders to consider in terms of appealing to “more selective” buyers, but overall we head into the new year in a robust sector, with plenty of growth opportunities and full of opportunity to create, and realise, value. Wishing everyone a very Merry Christmas and a happy healthy and prosperous new year. Adam Zoldan Photo: pixabay.com/Mohamed_hassan
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