Pictured above: Phil Burns, senior partner at Clearwater in Birmingham

Birmingham-based Clearwater Corporate Finance has delivered a strong increase in M&A transaction figures for its financial year ending 31 March 2010 despite the overall meltdown in M&A activity globally. The firm attributes this to its increased sector focus, investment in cross border capability and its innovative deal origination strategy.

The total value of deals that Clearwater advised on rose by 46 per cent to £436 million in FY2009/10 compared with £299.6 million in FY2008/09. This boosted the firm's average deal value by 33 per cent to £22.9 million compared with £16.6 million in the previous year. 

Clearwater originated 68 per cent of the deals it advised on in FY2009/10, helping the firm to outperform the market despite testing economic conditions.

The most active sector for the firm in terms of volume was retail and consumer (32 per cent); followed by industrial products (21 per cent), support services (21 per cent) and technology (16 per cent). 37 per cent of transactions that Clearwater advised on had some form of private equity involvement.

Clearwater also benefitted from its membership of cross border M&A organisation, IMAP, which has gone from strength to strength with the appointment of new partners serving India and Japan. The organisation ranked sixth in the world for completed transactions with values up to $100 million for the whole of 2009, according to the Thomson Reuters Mid-Market League Table. It is the fourth consecutive year that IMAP has been placed in the top 10 for the global mergers and acquisitions ranking.

Key deals that Clearwater advised on during the financial year included the private equity-backed £115 million MBO of technology and e-commerce solutions provider, 1st - The Exchange; The Hut Group's multi-million pound fund raising and acquisition of Zavvi; Swiss cosmetics manufacturer Mibelle AG's cross-border acquisition of a majority stake in personal care products producer, Hallam Beauty Limited; and the sale of Synseal Extrusions Limited, the UK's leading supplier of PVC-U windows, doors and conservatories, to private equity firm, H.I.G Capital.

Phil Burns, senior partner at Clearwater in Birmingham, said: "M&A activity was undoubtedly strained in 2009. Restricted funding was the largest barrier in the mid-market, with a number of private equity houses resolving to wait out the worst of the downturn and keep their cheque books in their pockets. However, we saw a significant increase in deal values in comparison to the previous financial year. We have invested heavily in our sector focus and our cross border capability. Our proactive approach in sourcing new mandates when others have moved resources away from M&A has paid dividends for us despite funding being hard to source and valuations at rock bottom.

"With price multiples already rising, shifting investor attitudes and the confidence that comes from seeing a raft of other mid-market deals complete, there are good reasons to be optimistic. The weak pound and corporates finding organic growth increasingly difficult to achieve against the global economic backdrop makes the UK an attractive place for investment. As a result, appetite for M&A will return, with competition hotting up for the strongest sector targets. Rivalry between private equity houses will also contribute to multiples increasing - having raised large funds in 2006 and 2007, many must now re-enter the market to ensure returns for their investors."