Review of 2024 and look ahead to 2025 for South West and Wales

As featured in Insider.

How would you summarise 2024 in the South West and Wales region, specifically with regard to M&A and the opportunities for private equity?

“We’ve had a steady pipeline of opportunities over the last 12 months, despite the macroeconomic challenges facing the M&A market, and this is down to the high calibre of businesses operating across the region.

“We invested in LendingMetrics, a fast-growing fintech business at the cutting edge of credit risk technology, and Waterscan, a tech-enabled water management consultancy, and are now supporting the management teams of both businesses as they deliver their organic and acquisitive growth strategies.

“We’ve also seen impressive growth across our portfolio. Bristol-based Hybrid, a leader in education media and marketing services, is a great example of a business pursuing a buy-and-build strategy and expanding internationally. They acquired the digital development agency Crisp in April in a move that enables Hybrid to deepen its expertise and tech-enabled solutions for clients, and have continued to expand in the US as they support a growing international client base.

“Beyond transactions, it’s been an exciting year for our team in the South West and Wales, which now supports the largest portfolio we’ve ever had in the region. We also welcomed Vera Kuehne and Sally Tam to the team and moved into a much bigger office in the prestigious Queen’s Square to make room for future growth.”

How do you expect the market to develop next year – specifically with regards to the outlook for M&A?

“We have a real appetite to continue to invest across the region and now that the industry has a clearer outlook on the post-election fiscal and tax environment, I’d expect to see an uptick in M&A activity across the market. Whilst the UK economy is still relatively flat with an increased tax burden on businesses, equity and debt funding is available to support strong and differentiated companies. We are also seeing an increasing propensity for management teams to pursue buy-and-build strategies as a way of accelerating growth, accessing new complementary offerings and penetrating geographies. I’m sure that trend will continue.

“While there will be a watchful eye on how US policies develop during 2025, helping businesses to increase exports or expand internationally is a key part of how we support management teams at LDC. Identifying and executing such opportunities will remain an important route to growth for many of the region’s businesses.

“There has been a reasonable amount of change in the regional and national advisory landscape and it bodes well that we’ve seen high levels of recruitment and investment from corporate finance firms in the region in 2024. At LDC, we are well served by that advisory community and the investment has sparked some exciting conversations which is contributing towards our positive feeling about the pipeline for 2025.”

What do you see as the key trends in 2025?

“From our conversations with business owners and management teams here in the South West, we have been struck by the strong levels of confidence of achieving growth in 2025, despite the economic environment. It has also been positive to hear about their plans to invest in key areas such as new products and services, people and technology.

“A key trend will be the continued evolution of technology and its impact on a broad range of sectors, such as life sciences, media and professional services, and companies, from innovative, services businesses that are tech-enabled through to pure-play tech businesses. Those companies that are investing in and harnessing new technologies will likely realise a competitive advantage.

“Ultimately, businesses that are embracing change successfully – whether it’s driven by regulation, technological developments or global macro and political dynamics – will continue to attract investor attention in 2025.”