MA Leaders Club

M&A opportunities ‘underestimated’

By Rebecca Weller

- Last updated on GMT

Multifaceted venues: pubs “underestimating the opportunities” presented by M&A activity within the sector (Pictured: MA Leaders Birmingham)
Multifaceted venues: pubs “underestimating the opportunities” presented by M&A activity within the sector (Pictured: MA Leaders Birmingham)

Related tags MA Leaders Property Birmingham

Firms are “underestimating the opportunities” presented by M&A activity within the sector as operators look to take on “smaller locations”, according to property experts.

Speaking at The MA Leaders Club meeting in Birmingham, West Midlands, on Thursday 2 March, property agent Davey & Co’s sales director Barry Alldread said while corporate transactions in the sector were down compared to 2019, property value has increased and many sites now receive multiple offers.

According to Ted Schama, partner at property agent Shelley Sandzer, this presents “more opportunities” for people to enter the industry with many “underestimating the opportunities” M&A activity can bring.

He said: “New [operators] can take advantage [of closures], not the fatter groups carrying more baggage and debt.

“There will be more opportunities for new people. The deals we are doing at the moment definitely reflect that.”

Ensure footfall 

Moreover, Alldread estimated more properties would come onto the market over the next six to 12 months with buyers looking for multi-faceted businesses with guaranteed footfall.

He said: “Since Covid, there has been a lack of businesses available on the market, everybody expected to see more.

“We are seeing more and more new operators coming to the party. People are looking at multi-faceted businesses with good footfall or viable demographic destination locations.”

Alldread continued a lot of village and country pubs had seen an influx of trade from city centre sites and the industry will “see more places come to the market over the next three to six months alongside more corporate disposals”.

“Will that have an effect on value? That remains to be seen, our view is values will continue to hold firm”, he added.

This comes as data from legal firm Irwin Mitchell​ earlier this month revealed the volume of corporate deals within the UK’s hospitality sector reached its highest level for five years in 2022.

Blended hospitality 

Though Schama noted the sector was “fragmented” and there was no one “dominant player” in terms of M&A activity for the industry.

However, he also explained “blended hospitality” business models could see an increase in the future, noting the necessity for firms to act like “chameleons” by transforming their offer to meet consumer desire for diverse settings that are more interchangeable between day and night.

Schama said: “[Pubs] need to capture consumers for longer periods of time and that means larger, more multifaceted venues with more going on.”

Additionally, Schama predicted the sector could see an increase in drive thru-style venues in the future.

He added: “We will see a crazier selection of drive-thrus​.

“Where it was traditionally dominated by McDonald’s and Burger King or KFC, you’re now seeing some extremes coming along.” 

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