The East of England provides a bountiful supply of deals across many sectors, from advanced engineering to agritech. Jo Russell speaks to M&A advisers in Cambridge and around the region.
The East of England spans six counties. Peterborough is its largest city, but it is Cambridge that has long hogged the spotlight, with a reputation as a tech and life sciences innovation powerhouse. According to Dealroom, the city represents 18% of the UK’s tech value. It delivers more than £16.90 value for every pound of VC investment (UK average is £5.40 for every pound); and is Europe’s largest tech cluster by both turnover and number of spin-outs.
Each regional centre, from Ipswich to Peterborough to Chelmsford, has its own network of business advisers and access to investment. Cambridge, with its high concentration of university spin-outs and start-ups, has spawned a successful ecosystem around an angel investor network, but is also home to tech behemoths.
“Cambridge has two bookends of the economic spectrum,” says Philip Olagunju, partner and head of corporate finance at PEM Corporate Finance. “There are plenty of bright individuals looking to monetise and commercialise their ideas, and a lot of investment is focused around the early-stage start-up community. At the other end are large tech unicorns with boots on the ground, including Arm, the semiconductor design company that currently has a market cap of around $110bn, as well as cyber-security firm Darktrace and biotech company Abcam.”
Unicorns rising
To date, 24 Cambridge-born companies have achieved unicorn status, resulting in the region being named the unicorn capital of Europe. Yet much of its success can be attributed to its angel investor network.
“Moving on from university spin-outs using family and friends for support, there are successful entrepreneurs who have established networks to reinvest some of their money in the next generation of technologies,” says Stephen Hart, PwC deals leader for the East of England. “They understand the entrepreneur process, particularly in tech and life science, and have the confidence to invest and the time to help those companies develop. That angel investor element is quite special and is a layer probably not available in most parts of the world.”
Between the angels and the unicorns lies a range of early-stage venture capital firms, including Cambridge Innovation Capital, Amadeus and IQ Capital, which all have offices in the city.
Private equity firms with teams focused on the region include LDC, the BGF and Foresight. The latter is a £100m fund backed by the Cambridgeshire Pension Fund. Its specific focus is local mid-market businesses and it has invested more than £43m to date. This includes its £5.75m investment in 2023 in Cambrionix, a designer of hardware and software solutions for the global mobile device management market.
“The company was set up by a husband and wife team who, having received an unexpected pre-emptive offer, started considering their options,” explains PwC’s Hart. “Their initial reaction was against private equity, but after meeting the Foresight team they decided to go forward. They have brought in a new commercial and executive team, and the company is now serving a global market with a great future ahead of it.” Hart adds that it was “a Cambridge deal through and through” – all parties knew each other.
Peter Watson, director of corporate finance at Prism, points to the sale of Springboard Pro as a deal that typifies the Cambridge scene. “Springboard Pro is a small Cambridge-based medical-focused design consultancy, full of bright people doing clever things with medical devices. It was sold to global healthcare manufacturer Sanner, which had growth ambitions and needed expertise in the earlier stages of device design. The team remains on board, but within a larger contract development and manufacturing operation backed by private equity and based in Germany.”
Stuart Davies
Partner, Grant Thornton
Grant Thornton’s Stuart Davies (above) has selected three recent transactions that give a snapshot of corporate finance in the East Anglia deals market.
Grant Thornton was the lead adviser on the MBO of Suffolk-based TMJ Interiors, a business that had grown to become a UK market leader in its sector. “The founder wanted to pass the business down to the next generation of management. It was a good local deal assisted by local advisers.”
In a more complex deal, the team advised PJ Thory, a Peterborough-based family-owned industrial business, and its subsidiary Gemmix, on the acquisition of three quarrying sites and five ready-mix concrete sites. “The sites were acquired from Heidelberg Materials, which was forced to sell them by the Competition and Markets Authority following its acquisition of large regional business Mick George Group. PJ Thory’s acquisition of those sites was a great deal for the company and enabled the main deal to complete.”
Grant Thornton also advised Signify Research, a Northampton-based healthcare market analysis firm, on a £6m investment by BGF. “That was a really good deal that will allow an innovative business to scale operations.”
More than one city
Look beyond the headline-grabbing Cambridge scene, however, and there is plenty more activity and diversity in the region. John Gethen, a BDO M&A deal advisory director who covers East Anglia, says there is a whole lot more: “In 2024, there were 478 deals done in East Anglia compared with 451 in 2023. Contrary to what many people may expect, given the profile of the life sciences and tech industries in the region, the sector that saw the largest amount of M&A activity in both those years – just over 30% of the total – were manufacturing and industrials. Those sectors are geographically well spread across East Anglia and typically outside of the large city centres.”
Spread across the region are a number of corporate finance markets and regional hubs, each with their own characteristics. Sectors range from agriculture to technology, and from business services to manufacturing. Dave Howes, FRP Advisory corporate finance partner, says: “Last year we did 27 deals in a challenging market. Our deal size is typically £5m-£50m and there is activity everywhere.”
If any generalisations can be made across such a broad spectrum of sectors, it is perhaps that the type of deal will differ between Cambridge and the wider East Anglian region.
Last year we did 27 deals in a challenging market. Our deal size is typically £5m-£50m and there is activity everywhere
PwC’s Hart says angel and VC investments mean there are more lower-value deals in Cambridge. “The more classic M&A tends to be found outside Cambridge in more traditional economies. In Norfolk and Suffolk alone, there are more than 1,000 food and drink manufacturing businesses employing more than 35,000 people.”
Grant Thornton partner Stuart Davies agrees that Norfolk and Suffolk house more established businesses ripe for M&A. “It can often be a retirement sale in that area. The average age is probably older, although there are obviously other business types there too.”
A recent employee ownership trust (EOT) in St Neots, on which Price Bailey advised, demonstrates just that point. Partner Simon Blake explains: “Lattice Labels, a St Neots-based labels manufacturer, was a traditional rather than high-tech business, where the owner was looking to retire. He chose the EOT route as a means by which management and the wider employee base could control their own destiny.”
John Gethen
Deal Advisory Director - M&A, BDO
Advisers agree that networks across the region are both strong and of real value. “Cambridge has a very well-developed adviser community, where everyone knows everyone,” says BDO’s John Gethen (above). “As a community we try to keep deals local. There is a definite desire for the professional advisers community to keep regional deals regionally advised.”
The same is true outside Cambridge, says FRP’s Howes. “Everyone tries to support each other and a lot of our corporate finance work comes from referrals. We have a huge spread, with individual communities. Given that you can’t be everywhere at once, building those relationships and networks is really important.”
There are a number of local networking events held across the region, ranging from the Steel Bodgers annual rugby fixture to the Cambridge Corporate Finance Club, a triannual event established by PwC and local solicitors Howes Percival, which now also attracts many mid-market PE investors from London.
Talent tested
Despite the differing size of businesses, diversity of sectors and geographic spread, one universal challenge is the attraction and retention of talent.
“The ultimate challenge is people,” says Olagunju. “Whereas London is quite transient, Cambridge is a close-knit community where I know and regularly interact with all of my counterparts. To try and headhunt locally would be difficult. It is also a challenge to retain people when the pull of big cities is so strong. The close proximity to London makes it attractive for someone who has trained locally and could almost double their money while commuting from Cambridge.”
Proximity to London can present similar issues in Essex, says FRP’s Howes. To counteract the lure of the bright lights, he points to the advantages of regional working. Alongside better work-life balance, “we can provide opportunities for people to make a name for themselves. You can work for a national firm in a local region and build up a reputation as a deal leader in that market.”
Another challenge is a smaller appetite for lending than is found in London, believes Blake. “Lenders are more large city-centric,” he says, whereas “the lenders in Cambridge are more relationship-specific. If you haven’t got a relationship then finding debt, particularly for cash flow or unsecured lending, is really hard. On the investment side, there are just less funds outside London than within. Foresight is able to do a lot of the transactions available locally partly because they are genuinely based in Cambridge and embedded in the community.”
Perhaps unsurprisingly, given the area’s status as a global innovation and R&D powerhouse, the government has thrown its weight behind big infrastructure plans for Cambridge and the surrounding regions. The Arc corridor, an expansion plan to link Cambridge and Oxford, which by some estimates could generate £78bn in economic output, has been declared a “national priority”. Chancellor Rachel Reeves said that the region “has the potential to be Europe’s Silicon Valley”, while promising to fix supply-side constraints.
There has already been significant investment in the city, notably the new Cambridge South train station currently under construction, supporting Addenbrookes Hospital and the connected life sciences and healthcare industries. Further afield, there is the east-west rail line to improve connectivity across the region, a £1.5bn A14 improvement scheme, and a multibillion-pound investment in the Lower Thames crossing between Essex and Kent, which was recently given the green light.
Government plans to clear the way for the building of thousands of new homes in Cambridge is, however, met with slightly raised eyebrows. “Cambridge is an incredibly crowded city, which needs some major infrastructure upgrades – not just to roads and rail, but also power and water, where there is not enough to service the planned housing,” says Gethen. “That is not an insurmountable issue, but it’s a challenge.”
Olagunju agrees. “Whenever ambitious growth targets are introduced, I question whether there is the capacity to absorb that growth,” he says. “The traffic in and around Cambridge has really deteriorated over recent years. The minds, ideas and fantastic businesses are here, as is the community framework to support them. But achieving these government-inspired growth targets will require significant physical infrastructure investment.”
County clusters
Outside Cambridge, the epicentre for tech and life sciences, lies a host of different industry clusters. Norfolk is known for excellence in agrifoods, with the Norwich research park being one of Europe’s life science and agricultural hubs. Hethel Engineering Centre, also in Norwich, is home to advanced engineering manufacturing businesses such as Lotus.
Around the coast, port centres Felixstowe, Harwich and Ipswich act as hubs for transport and logistics operations. Felixstowe is the UK’s largest container port, handling more than 40% of all UK container trade. Coastal areas are also heavily involved in the energy sector – historically fossil fuels, but increasingly including offshore wind and nuclear power.
Peterborough has benefited from significant growth driven by its location and infrastructure, and is a hub for land-based logistics and precision engineering.
Chelmsford in Essex has developed into an entrepreneurial market, with a high concentration of owner-managed businesses.
