Corporate Deals Review 2008

Corporate Review 2008

02

We went from 9th to 5th in the Sunday Times deal makers list, we retained our market leadership in the North West and we had a fantastic first year of operation in Yorkshire.

Welcome to Halliwells Corporate Group’s review of deal activity 2008.

In putting this review together, we wanted to take a look back at our own activity in the transactional market in 2008, look at the deals we have done in our 4 core focus areas – M&A, private equity, capital markets and finance – and to offer a view on what 2008 tells us about what to expect in 2009.

For many people active in the corporate finance market in 2009, the economic firestorm of the second half of 2008 is the first serious downturn that they have worked through. This is a challenge in itself, but the rapid deterioration in the global economic climate and the issues that presents for UK plc means that the transaction landscape has changed for the foreseeable future.

In analysing our deal activity in 2008, we have used both externally available statistics (mostly from Corpfin/Experian) and our own internal statistics. Many of the deals we work on are, for one reason or another, not publically disclosed. These deals are measured using the Corpfin criteria and we use them to look at our performance from year to year.

For the UK as a whole in 2008, Corfin reported a 21.5% fall in deal volume and a 54% fall in deal value. Worst hit appear to have been the very large, leveraged deals, but the value falls have affected the market as a whole.

2008 was a good year for Halliwells: we went from 9th to 5th in the Sunday Times deal makers list, we retained our market leadership in the North West and we had a fantastic first year of operation in Yorkshire. Probably the best achievement of all, we all but maintained our deal volume 2007 to 2008, seeing only a 5% reduction. Equally as pleasing given the 54% UK wide fall in deal value was our performance in seeing only a 15% fall in overall deal value, reflecting the quality of deals of which we worked.

Executive Summary

The key highlight of the year for us has been achieving a deal volume of 192 deals for 2008, only 10 fewer than we worked on in 2007. This performance was helped enormously by a record Q1 and a strong finish to the year. Since June, 2008 has been the worst market that most of our partners have ever worked in. During this period, we have cemented our market leadership position in the North West and continued to grow our business more widely in the UK as a whole – evidenced by our recent Sunday Times number 5 ranking for UK wide deals in 2008.

• Number 5 Corporate Law Firm UK wide – The Sunday Times

• UK Top 10 on MBO / MBI 2006-2008 – Corpfin

• Number 1 AIM Law firm in the North 2000-2008 – Corpfin

• Shortlisted for Corporate Law Firm of the Year 2008 – Insider Dealmakers Awards

• Number 1 Corporate Team in North West 2007, 2008 and 2009 – Insider

• Number 2 in North West on MBO / MBI 2006-2008 - Corpfin

• Number 1 for IPOs and Public Fundraisings in North West 2006-2008 - Corpfin

• Number 1 for Development Capital deals in North West 2006-2008 - Corpfin

These successes come down to two things: the strength and breadth of our client relationships; and the strength in depth of our team. Be they corporate, institutional, management or entrepreneurial clients, our relationship with a wide spread of clients is the cornerstone of our practice and something we believe has allowed us to maintain our deal volume performance. The ICAEW Corporate Finance qualification that a number of our partners hold, coupled with our approach of becoming our clients’ trusted legal AND business adviser, are illustrative of the added value we deliver and which we believe differentiates us from our competitors.

Halliwells’ Corporate Review 2008

03

2008: A Year of Two HalvesOverviewIn April 2008, the business and legal/accountancy trade press was full of stories about record deal volumes in March on the back of the change in the Capital Gains Tax regime. Indeed we enjoyed our best ever Q1 performance – 67 deals worth £2.2 Billion. The tax change simply accelerated deal flow such that many deals that would have taken place in April, May and perhaps June were sucked into Q1 by the 10% tax rate which sellers were understandably focussed on securing.

Q2 as a result was quiet, but there was still a decent level of activity, such that by the end of June we had done 113 deals, 58% of the total for the full year. For us, that dropped off significantly in Q3 – the traditionally busy Q4 though, after a slow start in October, came through well, with December being a particularly strong month for deal completions.

The result of this was that 2008 was a turbulent year but, in the end, one that was a success for us. Based on our own internal statistics, we advised on 192 (2007: 202) transactions with an aggregate value of £4.6 Billion (2007: £5.4 Billion). Corpfin is reporting a 21.5% decrease in deal volume UK-wide in 2007. Our average deal value is £24m (2007: £27m).

In a very difficult market, especially on the back of some terrible economic news in the second half, we are very pleased to have all but maintained our annual deal volume at the 2007 level and seen only an 11% fall in average deal value.

Another feature of 2008 was the increasing geographic spread of our activity. We are well known in the North West through our long established offices in Manchester and Liverpool, but elsewhere we are still relatively early in the development of our offices. We have not seen this hinder our ability to win good deals throughout the UK as our national reputation continues to grow.


04

Legal Advisers: Deals by Volume National

1 (1) DLA Piper 186

2 (2) Eversheds 157

3 (3) Allen & Overy 95

4 (7) Pinsent Masons 94

5 (9) Halliwells 91

6 (5) Linklaters 79

7 (4) Clifford Chance 76

8 (-) Jones Day 73

9 (-) Hammonds 72

10 (-) Norton Rose 67Source – The Sunday Times - 4 Jan 09

2008 2007 Deals


05 1 (2) DLA Piper 28

2 (6) Hammonds 21

3 (3) Addleshaw Goddard 19


5 (1) Eversheds 18

6 (7) Halliwells 15

7 (5) Walker Morris 15

8 (8) Cobbetts 13

9 (-) Dickinson Dees 7

10 (-) Dundas & Wilson 7Source – Corpfin

Legal Advisers: Deals by Volume Legal Advisers: Deals by VolumeNorth West Yorkshire

1 (1) Halliwells 59

2 (3) DLA Piper 46

3 (7) Brabners 42

4 (2) Eversheds 30

5 (5) DWF 24

6 (9) Cobbetts 23


8 (4) Addleshaw Goddard 20

9 (-) Pannone 18

10 (6) Hammonds 15Source – Corpfin

Legal Advisers: Deals by Volume Midlands

1 (2) Eversheds 47

2 (1) DLA Piper 34

3 (4) Wragge & Co 23


5 (5) HBJ Gateley Wareing 15

6 (9) Halliwells 14

7 (-) Cobbetts 12

8 (-) Lovells 11

9 (8) Hammonds 11

10 (-) Dundas & Wilson 11Source – Corpfin

Legal Advisers: Deals by Volume South West

Source – Corpfin

1 (6) Ashfords 25

2 (2) Eversheds 15

3 (8) Allen & Overy 14

4 (1) Clifford Chance 14

5 (-) Halliwells 14

6 (-) Linklaters 12

7 (3) Osborne Clark 12

8 (8) DLA Piper 12

9 (9) Jones Day 11

10 (10) BPE 11

2008 2007 Deals 2008 2007 Deals

2008 2007 Deals 2008 2007 Deals

M&A and International HighlightsWe had a good year in 2008, both in the UK and on cross border deals.

Our involvement in 3 significant deals in the travel sector emphasises our growing market share in that area as we begin to become recognised as a leading adviser to travel businesses. Similarly in the transport sector, our work with Stobart Group has enabled us to expand both our reputation and our relationships. We see both sectors continuing to consolidate.

Internationally, we advised on projects in, amongst others, India, China, Singapore, Australia, USA, Canada, Ireland, France, Spain, Italy, Montenegro, Nigeria and Sudan.

We continued to secure business in the Asia Pacific region (mainly China) and are involved in a number of significant projects on behalf of Chinese companies.

This ranges from IPO work (albeit there is very little of this at the moment) through to strategic review projects and the first foray of Chinese companies into acquisitions in Western Europe.

We have a dedicated Asia team comprising both UK and Chinese professionals. The team completed 6 IPO’s of Chinese companies on AIM over the last 3 years and undertook a range of M&A and other projects for its Asian clients.

We also began to benefit from efforts invested into India. We advised on two substantial Indian deals in 2008 valued at a combined £190m. Each of these was a complex, multi-jurisdiction transaction.

We have an extensive network of overseas law firms with whom we work on international projects. This is a bespoke Halliwells network of “good friends”.


06

Global Travel Group Travel £100m

Pontin’s Leisure £46m

Brookhouse Aerospace £43m

Richardson Projects Construction £40m

Tekton Software £21m

PCMG Business Services £n/d

Elegant Resorts Travel £n/d

Carrier Travel £n/d

James Irlam Transport £60m

London Southend Airport Transport £21m

Burns Anderson plc Financial Services £14m

Roadferry Transport £10m

WA Developments Transport £10m

WFCA Integrated Media £8m

CPBEC Consumer Products £8m

Autogen Bioclear Biotech £6m

Company Sector Enterprise Value Target Sector Enterprise Value

Sale mandates Acquisitions

M&A Highlights M&A Highlights

Private EquityWithout doubt, the environment for private equity deals changed radically during 2008 as the availability of the levels of debt that the sector has become used to effectively dried up. Certainly, the really big deals just did not happen but for the most part though, historically, this has not been an area where we have applied our primary resource. Our focus has been on the mid-market and this saw us advising Zeus Private Equity, Infinity Asset Management, NBGI Private Equity and Isis Equity Partners in 2008.

We also advised on the formation of 3 new funds and have a number of current mandates to advise on the set up of “turnaround funds” – a sign of the times.

Our private equity practice is well balanced in that we advise private equity houses, PE-backed companies, banks and management teams. Through this broad spread of roles on private equity deals, we are able to provide high quality input on our projects with a full understanding of the sometimes competing interests of the various parties involved.


07

Zeus Private Equity Investment in XLN Telecom

Isis Equity Partners Investment in Carnell

Zeus Private Equity Further investment in Hallmark Hotels

NBGI Private Equity Investment in T Jolly

Infinity Asset Management Fund formation

20:20 Mobile Group Equity Restructuring

Fishawack MBO

Training for Travel Investment by Aberdeen Development Capital

Infinity Asset Management Investment in Goldshield

Client Deal

Private Equity

08

We continue to advise a portfolio of 55 AIM quoted Clients.

Capital MarketsIn a year when IPO’s were all but impossible, we worked with our Main Market and AIM quoted portfolio to secure secondary fundraisings, support their deal activity and focus on critical compliance and corporate governance issues.

Our flagship capital markets deal for 2008 was advising Main Market listed Stobart Group on its £75m placing and open offer. We also advised Stobart on a £21m placing in December to support its acquisition of London Southend Airport. Other deals include:

We continue to advise a portfolio of 55 AIM quoted companies and grow our list of Main Market clients which now includes companies such as JJB Sports, Stobart Group and JD Sports Fashion.

FinanceOur finance team has always split its work between advising lender and borrower and this continued in 2008. It was an extremely tough year in the banking sector, and this will no doubt continue into 2009 as the banks and other financial institutions have limited capital to lend and they concentrate on their existing lending relationships.

We have continued to win panel appointments and now provide support for most of the UK’s major financial institutions.

Our finance team also plays a critical role for us in advising our corporate clients on their borrowing arrangements, whether in connection with acquisitions and other projects or their day to day working capital facilities.

Despite the doom and gloom, we advised a wide range of banks and other financial institutions on a number of standout deals in 2008:

09

Client Deal Enterprise Value

Bank of Scotland Development finance £410m

UK Building Society Property finance £300m

Bank of Scotland Restructure and property finance £115m

RBS/HSBC/Rothschild Loan facilities £84m

National Australia Bank Property financing £46m

Lloyds TSB Acquisition and development capital £22m

Barclays Invoice discounting £15m

Yorkshire Bank MBO £12m

RBS Property financing £11m

Alliance & Leicester Term loan £6m

Begbies Traynor Placing £15m

Cantono Placing and disposal £5m

Byotrol Placing £4m

Carr’s Milling Placing £3m

Company Deal Enterprise Value

Capital Markets

Finance

Emerging Companies and Venture CapitalHalliwells has a long track record of advising emerging, high growth companies and their funders. In many cases, we have worked with companies from their early stages, through acquisitions and into private equity deals, trade sales or IPO’s. We continue to work with a wide variety of clients in the broad technology sector, specialist technology areas such as healthcare and life sciences and in other areas of innovation.

We regularly advise some of the UK’s most active venture capital funds including RisingStars Growth Fund, YFM and Coalfields Enterprise Fund. Our corporate client list features some of the UK’s most exciting young companies such as The Hut, winner of the Sunday Times/Bank of Scotland Entrepreneur of the Year award in 2008.

2009: What Next?

There can be little doubt that 2009 is going to be an extremely challenging year for the UK economy as a whole – and of course this will have an impact on deal volumes and values. We believe that deal volume in the first half of 2009 will be down on that in the second half of 2008, with the prospect of more activity only if the UK economy and business confidence in general can begin its recovery from Q2 onwards. In terms of our own deal volume in 2009, we see maintaining our strong 2008 performance as being a major challenge.

Much will depend on the way the banks behave and their appetite for deals once they re-enter the market. Pricing expectations are on their way down to a new “realistic” level, which should help – but renewed confidence will be required across the economy in general before the market becomes more settled.

For our part, we believe that our focus on the wide range of clients we advise, our “hands on” style and the resultant ability we have to differentiate our offering will serve us well in this difficult market.

10


11We believe that deal volume in the first half of 2009 will be down on that in the second half of 2008, with the prospect of more activity only if the UK economy and business confidence in general can begin its recovery from Q2 onwards.

Ref: Halliwells 1142/01.09

www.halliwells.comHalliwells LLP is a limited liability partnership

registered in England and Wales under registered number OC307980 whose registered office is at

3 Hardman Square, Spinningfields, Manchester M3 3EB.

A list of members is available for inspection at the registered office. Any reference to a partner in relation

to Halliwells LLP means a member of Halliwells LLP. Regulated by the Solicitors Regulation Authority.

This brochure was published in January 2009 and is intended only as a general guide. It should not be relied upon

as a substitute for taking advice in particular circumstances. Before acting on anything contained within this publication,

please consult your usual Halliwells partner.

Halliwells LLP Tel: +44 (0)844 875 8000

3 Hardman Square Spinningfields Manchester M3 3EB Fax: +44 (0)844 875 8001 DX 14317 Manchester 1

1 Threadneedle Street London EC2R 8AY Fax: +44 (0)844 875 8002 DX 98933 Cheapside 2

City Plaza Pinfold Street Sheffield S1 2GU Fax: +44 (0)844 875 8003 DX 10525 Sheffield

The Plaza 100 Old Hall Street Liverpool L3 9TD Fax: +44 (0)844 875 8004 DX 14126 Liverpool 1

www.halliwells.com

Corporate Deals Review 2008

Documents