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Creative Tops Ltd, one of the UK’s leading tableware organisations together with our successful Hong Kong operation (CTFE) have been acquired by Lifetime Brands, Inc. (NASDAQ GS: LCUT), to further boost their development and expansion into existing and international markets.

Click here to read press release on Lifetime Brands, Inc. acquire Creative Tops Ltd

Despite the ongoing Eurozone sovereign debt crisis, the UK M&A market remains resilient and the Bishopsgate pipeline continues to be strong.

The Allen & Overy M&A index showed a 12% increase in value of cross-border deals in 2011 compared to 2010, and we expect this trend to continue in 2012 with cash rich corporates looking to enter the market.

For private equity players in particular, there is pressure to do deals which will continue to create a pipeline of deals.  As ever, the problem for both buyers and sellers right now is the availability of debt funding and this will continue to keep multiples at sensible levels.

The Bishop is delighted to report on Bishopsgate’s latest deal, the sale of Creative Tops Limited to Nasdaq quoted, Lifetime Brands Inc, one of the largest table top and kitchenware companies in the US.

This is Bishopsgate’s second US cross-border deal this year and we wish the Creative Tops team every success in the next stage of its growth story.

Creative Tops is a highly regarded tableware and kitchen products business with operations in Corby and Hong Kong, and the acquisition will provide Lifetime with the springboard to expand into the European market.  Lifetime has sales of US$500m and an extensive portfolio of brands such as KitchenAid and Farberware.

Bishopsgate project managed the transaction from start to finish and we are delighted for the Vendors, Pat Dawson and Jon Driver, and we wish them and the management team well.

The volume of deals completed during the first nine months of 2011 in the mid-market is significantly up on last year according to Cass Business School, who research the UK Buy-out market.

The data showed that there was 63 transactions completed between 1 January 2011 and 30 September 2011 compared to 50 transactions in the same period last year and just 25 in 2009.

The combined deal value of £785 million compares to £698 million in 2010 and this is an encouraging sign for the private equity market.

Following criticism from the corporate finance community, the Business Growth Fund has relaxed its criteria and it will now invest £2m to £10m in companies with Turnover of between £5m and £100m.  As discussed in a previous blog, the Bishop said the Fund was aimed at a market which was already crowded with venture capitalists.  By now looking at growth companies with Turnover of £5m, the Fund may help to address the equity funding gap for smaller businesses.

However, we are still unimpressed with the Fund’s target criteria as the major equity gap in the UK exists for smaller companies looking for investment of £0.5m to £2m.  We will follow the BGF’s progress with interest.

To strengthen our cross-border deal making, Bishopsgate has joined Kreston International, a global network of partner led advisory and accountancy firms.  Kreston is a network of firms with offices in Asia Pacific, Europe, Middle East, Africa, Latin America and North America.  The global resource of Kreston consists of 18,600 professional and support staff and services include cross border acquisitions for purchasers and vendors, due diligence, audit, tax and forensic accounting.

Commenting on our new tie-up with Kreston, the Bishop said “we are delighted to be part of an expanding, partner-led network with significant global reach and we believe that Kreston will strengthen our ability to find overseas buyers for many of our UK clients.  Historically, about a quarter of Bishopsgate’s transactions have been cross-border and our membership of Kreston will improve access to “hot buyers” from overseas.”

The Business Growth Fund is a major new growth fund of £2.5billion backed by the UK’s largest banks with an ambitious plan to provide equity funding to SMEs.

Launched last month, it will focus on equity investing between £2m and £10m in growth businesses that have turnover of around £10m to £100m.  BGF will take a stake of between 20% to 40%, and will have a representative on the board.

Whilst the Bishop welcomes a new entrant to the mid-market, we are already well serviced by private equity houses looking to invest in the £2m to £10m equity range.  The equity gap exists between £0.5m and £2m with companies of Turnover less than £10million and we believe the new fund should focus on smaller transactions, where there is a dearth of capital.

We will follow the progress of the BGF with interest, as it may have the potential to fill the gap left by the “old 3i”, but we hope that it will lower its investment criteria, as the SME sector is the lifeblood of the UK economy.

The buy-out market showed signs of recovery in 2010, albeit from the low base set in 2009.

According to CMBOR (Centre for Management Buy-out Research), the value of UK buy-outs in 2010 more than trebled in value to £18.9 million from the 15 year low of £5.6 million in 2009.

The final quarter of 2010 was the busiest, but the strong rebound was driven by a marked increase in larger deals over £100 million with secondary buy-outs driving activity.  The improved confidence has yet to filter down to smaller deals with the continued lack of debt affecting the value of transactions.

The outlook for 2011 remains uncertain and it is too early to say whether the rebound in 2010 will lead to a sustained rally in buy-out activity.

The buy-out market had its busiest quarter in two years in Q1 2011 with 23 private equity buy-outs worth an aggregate of £828 million completed in the £10 million to £100 million price range.

The research taken from Lyceum Capital and Cass Business School’s Buy-out Dashboard reflects growing confidence amongst investors to support mid-market companies that have performed well throughout the recession.

Unfortunately, the confidence has not yet filtered down into the sub £10 million buy-out market, with banks remaining reluctant to lend on smaller transactions and vendors continuing to hold out for “pre-credit crunch” valuations.

George Osborne’s Budget revealed good news for entrepreneurs with the news that Entrepreneurs’ Relief will double to £10 million.  This is dependent upon the respective shareholder owning 5% or more of the company being sold, with those shareholders owning less than 5% still suffering the full CGT charge. 

We support this change and we hope that this will encourage more activity in the corporate finance market and make the UK a more attractive place for entrepreneurs.

There was additional good news on Corporation Tax, which will be reduced by 2% from April 2011 rather than 1% as previously indicated.  This will make the UK a more attractive place to establish a company and should provide an increase in cross-border M&A activity, with UK targets becoming more interesting for overseas buyers.

Completing the picture for entrepreneurs, the Chancellor announced some important changes to VCT and EIS rules.  The tax relief on Enterprise Investment Schemes will increase from 20% to 30% and the total amount invested by a VCT or EIS into an individual company will be increased to £10 million from £1 million.