Raising a glass to a bumper M&A year for the licensed sector

News Article

Merger and acquisition (M&A) activity in the pub and licenced premises sector reached an all-time high in 2019, new research has revealed.

The study, published by market specialists Fleurets, shows that the sector remains buoyant despite economic and political headwinds.

According to the report, an estimated £8.15 billion was invested in pub transactions in 2019, rising to £10 billion when leisure property investments and brewery transactions are included.

Likewise, the average freehold sale price increased by 19 per cent to £589,262 over the same period.

The report authors suggest that despite concerns over the Pub Code, fears of a staffing shortage, minimum wage rises and increasing purchase and operational costs, the sector continues to attract investors.

“The pub market is not struggling. The significant benefits of asset-backed cash flow have attracted new overseas investors, established investment funds and existing trade buyers. They have all drawn the conclusion that the pub market offers sound investment fundamentals,” said Fleurets.

They added: “There are no signs that M&A activity will stop in 2020.”

In total, the six largest deals – accounting for 7,400 individual pub transactions – were led by major groups Heineken, Young’s, Stonegate, Ei Group, Fullers, and Robinsons.

By comparison, fewer than 600 pubs were sold in the 14 largest deals throughout the whole of 2018.

The study also reveals that around 65 per cent of freehold transactions are sold for “continued use”, with the remaining sites most commonly repurposed for residential, restaurant, or retail use.

BJ Chong, a Partner with Palmers, said: “These figures are welcome news for the licensed sector and it appears that the confident momentum will continue throughout 2020 for entrepreneurs with experience of the hospitality industry.

“As with all M&A opportunities, due diligence is vital in the early stages so it is important to enlist expert support from legal advisors who can ensure the deal stacks up.”

Palmers Solicitors has a resourceful and experienced Corporate Finance Department and a proven track record of providing legal expertise in company sales and purchases.

If you need help and advice raising capital or support with due diligence, please get in touch with our expert team.