M&A activity soared to highest level for 5 years in 2022

Examination of Experian’s MarketIQ database showed there were 160 trade agreements during 2022 in the food and beverage services sector, 52 of which involved pub companies compared to 49 in 2021.

In addition, the average number of merger and acquisition (M&A)​ activity for pubs over the last 10 years was 48, meaning last year was above average and the third highest in the last decade.

Irwin Mitchell corporate partner Victoria Zivkovic said: “Despite 2022 being one of the most challenging for the hospitality sector, operators were still on the lookout to complete deals and grow their portfolios through M&A.

Economic uncertainty 

“There were signs of a slowdown in activity in the final quarter but with economic uncertainty being at its highest at that point, it is understandable that volumes reduced.”

The analysis, which included M&A movement amongst restaurants, pubs, clubs and hotels, revealed the number of completed transactions was the highest it had been since 2018.

Additionally, the number of deals in 2021 stood at just 104 while the year before was 140 with the figure for 2022 only surpassed in 2018 (178) and in 2016 (185).

Out of the 160 deals completed in 2022, 63% were acquisitions while 16% involved development capital being injected to support business growth.

Moreover, 5% of the deals involved an investor being bought out whilst a similar proportion were restructuring / refinancing deals.

Forward-looking 

Acquisitions made up a similar proportion of the 104 transactions in 2021 (65%) with development capital representing 13.7% of transactions in the sector.

However, there were no restructuring/financing deals reported during the period.

This comes as recent data from accountancy group UHY Hacker showed the number of pub and bar insolvencies​ has risen by more than three-quarters (83%) in the past year.

Moreover, almost a third (32%) of pub operators were looking to purchase sites, while just over a quarter (26%) were planning to sell in 2023, the latest Business Outlook report​ from property adviser Christie & Co​ revealed.

Zivkovic added: “Although the number of insolvencies across the sector has increased recently, there are plenty of forward-looking organisations that are looking to invest in the future and take advantage of some undervalued assets.”