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

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.

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 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.

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.

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.”

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.

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 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.