Dealmaking in Scotland – what’s next? Laura Falls comment

The challenges facing business over the past 18 months have been unprecedented.

For many Scottish companies, attempting to navigate the post-Brexit trading environment would have been difficult enough without the added turmoil brought on by the pandemic – and an air of uncertainty remains amid the presence of the Omicron variant.

Because the pandemic has had such serious consequences for the business community, it would have been understandable if we’d seen a slowdown in merger-and-acquisition (M&A) activity.

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When Covid first hit, there was some pullback in strategic decision-making and, as a result, a slowdown in deal activity for a few months. Understandably, there was a period of readjustment for most people, both personally and professionally, as we settled into the notion of continuing to operate effectively away from the office.

Ms Falls says the pipeline of deals has remained 'very consistent' and looks set to continue this year. Picture: Renzo Mazzolini.Ms Falls says the pipeline of deals has remained 'very consistent' and looks set to continue this year. Picture: Renzo Mazzolini.
Ms Falls says the pipeline of deals has remained 'very consistent' and looks set to continue this year. Picture: Renzo Mazzolini.
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But there’s no doubt that as we’ve become more accustomed to working with the pandemic as a backdrop, people have found ways that have enabled them to surmount the challenges they’ve been faced with.

For those who can, the ability to work remotely from the kitchen table or the bedroom has undoubtedly made a difference to levels of confidence. Thanks to technology, deals can be done from anywhere and, crucially, strategic decisions made in the knowledge that businesses, in many cases, are still able to function.

Clearly, that has to be qualified when it comes to some sectors, such as manufacturing. For companies who need “boots on the ground”, the ability to operate to the same capacity will remain unpredictable for as long as new strains of the virus continue to appear.

But sectors such as technology have continued to work effectively. Strategic decisions can be made that, in turn, lead to deals being done. As the pandemic has eased, that’s certainly been our experience and, while we don’t know which twists and turns the virus has still to take, we would expect the flow of deals to remain strong.

The beginning of 2021 was marked by an incredibly strong start. There is a view that this could have been the consequence of potential changes to Capital Gains Tax (CGT) as business-owners looked to sell assets to take advantage of rates in place.


While some degree of slowdown in activity over the summer might have been expected, it failed to materialise, and our experience has been that the pipeline of deals has remained very consistent and looks set to continue this year.

There’s activity across a range of sectors but there are certainly some where there are definite spikes, particularly so in tech. The deal that signalled a gear shift was the acquisition of Symphonic Software by Ping Identity in the last quarter of 2020.

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From there, the pace of transactions and the scale of US interest definitely accelerated and we’ve seen that again with deals such as the $400 million (£299m) sale of Current Health to Best Buy.

The renewables sector is also looking extremely strong, and we expect that to continue in 2022. Some activity is being prompted by the drive to net zero, but there’s plenty of evidence that it’s also a result of the wider sustainability agenda.

We’ve seen a number of deals in the wider environmental, social, and governance (ESG) space, including acting for Vento Ludens on its sale to EDP Renewables and the work we are doing with Tumelo in the ESG investment engagement space. This year, we can expect to see more deals around green energy as business refines its net-zero targets, and ESG establishes itself as a standing agenda item.

Professional services is also buoyant as evidenced by our work with AAB, which has been very active with deals such as its mergers with Hardie Caldwell and Sagars Accountants and acquisition of Purpose HR along with the investment into AAB from August Equity.


Across the dealmakers landscape, our view would be that confidence levels are fairly steady, strategic decisions are being made, and deals are being done.

In terms of wider transactions, there’s a strong appetite from overseas investors, a lot of venture-capital activity, and Scotland is still viewed as being relatively cheap in terms of software development and human resources.

Concerns obviously remain about a potential rise in interest rates, and it does seem inevitable that this will eventually happen, which could clearly have some impact on deal activity. Levels of insolvency haven’t actually been as high as we might have expected in the circumstances and government has done an effective job in propping up businesses and providing the support they needed to survive.

However, the furlough scheme has ended and there are no guarantees about what level of financial support from government might be available to assist businesses if that proved to be necessary. In short, the Chancellor has taken a number of actions during the pandemic and, at some point, those have to be paid for.

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Recent events have demonstrated just how unpredictable life is for all of us, and there’s a general acceptance that things will never quite be the same as they were when global viruses were mostly confined to the scripts of Hollywood blockbusters.

However, given how well M&A activity has bounced back from the worst days of the pandemic and the ever-improving levels of confidence, we’re optimistic that the outlook for 2022 is positive.

Laura Falls, legal director at Addleshaw Goddard

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