In August 2008…
… we opened our doors for the first time, with optimism but some nervousness. It was evident as 2008 unfolded that the UK’s long economic boom was coming to an end – Northern Rock and Bear Stearns had already failed and the financial system was clearly under pressure. However, what was not clear was just how severe the economic downturn would be.
Six weeks after we opened our office, Lehman Brothers collapsed into bankruptcy. One of the oldest, largest and most prominent investment banks in the US had been allowed to go bust and the Global Financial Crisis began in earnest. The FTSE100 suffered its worst ever year in 2008, ending 31% down and it was to fall another 21% until it bottomed out in 2009 as the markets worried about whether the whole financial system would collapse. The Bank of England base rate stood at 5% at the time of Lehman’s failure – by March 2009 it been reduced to 0.5%, an unprecedented fall.
Boom turned to bust…
…and arguably has turned to boom again – the tough years immediately post Lehman have been forgotten. Despite the continuing backdrop of austerity, M&A has surged in the last 5 years. Cheap and easily available money, spurred by the impact of nearly £450 billion Quantitative Easing, is driving asset prices seemingly ever higher. The FTSE100 reached a record high this year, M&A volumes and values are at or near record highs, leverage multiples and associated terms are at a peak and the amount of money raised by private equity is also at record highs. Across the M62 corridor there are now more than twenty private equity firms with a base in the region, employing more than 100 investment professionals, and this region saw M&A deal value reach nearly £13bn in 2017.
As we near 2019…
…we are once again optimistic, but with some nervousness. In June 2016, the UK voted to leave the European Union. Article 50 was triggered in March 2017 and in March 2019 the UK will exit the EU. As yet, the future arrangements with the EU are not finalised, but the way in which the UK finds its new place in the World will be the defining feature of the next 10 years. This kind of change can be difficult, but it will also create lots of opportunity for the North West and companies based here.
It may sound trite to say it, but the continued dominance of Manchester in the English Premier League has helped and should continue to do so. Whatever your personal allegiances, the global success of the EPL, the American ownership of Manchester United and the Abu Dhabi ownership of Manchester City keeps our region in the forefront of global consciousness.
The UK will have to increasingly look eastward and Manchester is uniquely placed to take advantage of these opportunities. The City’s relationship with China is growing strongly – the Manchester China Forum has now been running for 5 years, in 2015 President Xi visited our City and there are now regular direct flights to China from Manchester – and already the Chinese have invested nearly £4bn into Manchester’s infrastructure. Japan’s relationship with Manchester is long-standing, and many notable Japanese companies have investments in the North West.
The North West has truly shaken off its post-industrial hangover. From 2002 to 2015, Manchester experienced population growth of 149% in the city centre and jobs growth of 84% from 1998 to 2015, according to a report by Centre for Cities. The regeneration of the Northern Quarter, the ongoing regeneration of Ancoats and New Islington, the changes at Sportcity, the development of the Metrolink network and Manchester Airport – all of these things put Manchester on an incredibly strong footing to continue to be the heart of the UK outside London.
For the M&A market…
…the next 10 years is almost certain to be dominated by increasing cross-border M&A (both inbound and outbound), and by businesses taking advantage of the great defining trends of our time – technology; connectivity; and an ageing population. Advisory firms need to be set up to deal with clients’ requirements over the coming decade – at DC Advisory we have invested significantly with our parent company, Daiwa Securities of Japan. We have done our own M&A, buying one of the pre-eminent technology M&A boutiques in the USA, Signal Hill, and bringing it into our US firm – DCS Advisory. We have formed key strategic alliances in China, Australia and South America. We are building up our team in London and Manchester. Our business now has an outstanding global footprint ready to help our clients meet the challenges and opportunities of the next ten years. We are looking forward to it.
We’d like to thank you all for your support over the last decade and look forward to working together to make the next 10 years as great a success.
