Throughout Scotland’s deals and dealmakers, brilliant ideas, innovation and human endeavour continue to be rewarded in a steady flow of business transactions. Our comprehensive list looks at the deal instigators, the dealmakers and key advisers who have helped shape a record year
A bumper end to a strong year for Scotland’s deals and dealmakers of 2024 has fuelled hopes of further progress ahead during 2025.
The final quarter of the year saw 163 deals reported, a level of activity not seen in Scotland since 2018.
Although a significant proportion of the deal flow was driven by looming tax changes, the Scottish deals tally for 2024 outstripped growth rates in the wider UK market.
Deal volume rose by 25 per cent from 419 deals to 522 according to Experian’s MarketIQ data and the total value of deals also jumped by more than 20 per cent reaching £9.5bn, up from £7.9bn in the previous year.
April Bingham, head of corporate at Scottish commercial law firm Bellwether Green, confirms it has been an “extremely busy” period for advisers.
“We recently turned away a transaction because we were at full capacity and we tried to refer it to other firms, but they were also too busy,” she reports.
The reduction in Business Asset Disposal Relief for entrepreneurs selling their businesses has been a key factor in the rush ahead of the end of the tax year.
“It may only be the first million in a deal that you get relief on, but for a Scottish SME being sold for £6m with four shareholders that represents a significant part of the sale proceeds,” Bingham points out.
The ‘boomer’ generation of entrepreneurs have accounted for much of the M&A activity in recent years and Bingham says her team has also been dealing with a surprising number of exits for those in their seventies.
“These people are often still very fit and healthy and might have planned to sell earlier in their careers but one thing or another, whether it’s the pandemic or inflation, has come along and made them batten down the hatches and carry on until now.”
Professional services was the most active area for Scotland’s deals and dealmakers in 2024 with a year-on-year rise of 13 per cent thanks to continuing consolidation in sectors such as wealth management, followed by manufacturing and construction.
We recently turned away a transaction because we were at full capacity
Although activity in the wider oil and gas sector – once a dominant force in Scotland’s deals and dealmakers markets – remains well below historic levels, a flurry of recent announcements around the North Sea oil and gas production sector, including the UK Government’s plans to replace the energy profits levy when it comes to an end in 2030, could be a catalyst for transactions.
Shell and Equinor have unveiled plans to combine their assets under a new Aberdeen-based company that would become the basin’s largest producer and operators including Serica and Edinburgh-based Capricorn Energy have both said they are currently eyeing up North Sea interests.
Nick Dalgarno, investment bank Piper Sandler’s Aberdeen-based managing director, says the appetite for acquisitions could be a “sign that things have gone too far” in terms of valuations in the region.
“I think the war in Ukraine and more recent developments have really focused minds on energy security,” he says.
Deals activity in the subsea sector is also recovering strongly after what Dalgarno said had been the “best part of a decade in the doldrums”.
“If it floats or goes on the back of something that floats, there is now a recognition that it is likely to be relevant to the offshore wind industry and so there is a natural transition.”
The development of floating offshore wind in particular and the implications for companies likely to benefit from it is being closely watched by investors.
“The main subsea players are likely to lead the market in floating wind where the magnitude of market projections dwarf anything seen in oil and gas,” says Dalgarno.
“But no-one is really sure when that industry is going to take off which is a challenge for the likes of private equity players who work on a three to five year investment cycle.”
Winter Deals in Focus
Bio-tech attracts £2.3m to revolutionise dairy farming
Biotangents, based at the Pentland Science Park outside Edinburgh, secured £2.3m of investment led by St Andrews-based Eos Advisory and backed by British Business Investments, Kelvin Capital and Scottish Enterprise.
The company is behind an on-farm diagnostic device aimed at addressing bovine mastitis in dairy cows which is estimated to cost the global dairy farming industry about £20bn every year.
Employees take control at IT company
Stirling-based Expert IT Solutions was acquired by an Employee Ownership Trust
(EOT).
The company was founded by entrepreneurs Mark Lonnen and Gavin Glass in 2002 with colleague Graeme Emms later buying into the company.
The transaction was supported by Carole Leslie and Alan Watt of employee buyout specialist Ownership Associates and Alastair Barclay of lawyers, Kerr Stirling.
Distributor bought in seven-figure deal
Aberdeen-based Scots Bearings was acquired by Italian-owned Antifriction Components in a seven-figure deal.
The combined business will be the largest specialist distributor of critical moving parts in Scotland, with seven sites across the country. Scots Bearings’ founder David Jackson will continue in his role as managing director. Scots Bearings was advised by Hall Morrice and Burness Paull.
Debt recovery firm hits acquisition trail
BPO Collections, which works with clients including Vodafone, Sky and HMRC, acquired Surrey-based CCS Collect.
The deal by the Ayrshire firm, founded in 2006 by Graham Rankin, was supported by a £3.3m loan from digital bank OakNorth. The acquisition came amid strong growth in demand for debt collection services.
Insulation innovation company wins backing
Midlothian-based company Sisaltech raised £800,000 in a funding round led by Tricapital Angels, with backing from Scottish Enterprise. The firm uses natural and recycled fibres to create low-carbon insulation products that are well-suited to retrofitting traditional stone buildings.
Recovery in equity deals for smaller companies
Equity investment into Scotland’s smaller companies saw a significant bounce-back last year after a difficult 2023.
Latest figures show the value of reported equity deals involving smaller businesses in Scotland rose by more than 14 per cent in the first three quarters of the year compared to the same period the previous year. The growth was more than twice that seen across the UK according to data from the British Business Bank.
A clutch of deals announced so far this year have provided confidence that with the prospect of lower interest rates, the positive momentum will continue.
Glasgow-headquartered online commodities marketplace BLK Global secured £50m in an equity round backed by Panama-based investment group Nimbus Capital.
Smaller deals of Scotland’s deals and dealmakers include Falkirk biotech firm uFraction8 securing £3.4m in a funding round led by Foresight Group and Edinburgh-based insect genetics firm Beta Bugs attracted £2.1m from Tricapital Angels and Scottish Enterprise.
Tom Faichnie, partner at Aberdeen-based Quantify Advisors, argues that although there is a significant amount of equity funding currently available, it is important businesses ensure they are in the best position to attract it.
“The main problem we find is that many businesses are not quite ready for investment because their business plans are not sufficiently robust and their financials are not readily available,” he explains.
“In a dynamic marketplace where so many enterprises are actively seeking equity and funders are receiving multiple opportunities, a well-prepared proposal with detailed financial accounts and forecasts will put ambitious SMEs to the front of the queue for funding,” he advises.
*The Edinburgh-based biotechnology company raised £5m to scale up production of its cell analysis technology. Funding was led by Archangels investors with participation from Old College Capital, Scottish Enterprise and British Business Bank. The investment is supporting a sales drive of Cytomos’ first commercial product, Celledonia, built on its AuraCyt technology platform.
Photograph: Mike Wilkinson. 01/08/23
Copyright: Mike Wilkinson.
www.mike-wilkinson.com
