AN INVESTOR’S VIEW: AREAS OF INTEREST FOR 2016

We wish everyone a very happy Christmas break, and a prosperous 2016. We really appreciate the support we have had through 2015 as we launched Beech Tree Private Equity, and look forward to an active 2016.

As we end a good year of transactions for all involved in M&A, we thought we’d share five areas where we expect to see strong activity in 2016. We hope you enjoy our “crystal ball” gazing as we head into the festive cheer…..

Fintech – A number of drivers are creating the backdrop to see some really strong growth businesses in the sector, particularly fuelled by increased availability of funding, changes in regulation and an increasing demand for “low friction” userexperience. Specific areas of interest include specialist lending platforms, exchanges, payments and processing, risk management / compliance technology and securities / trading solutions.

Consumer – the continued switch to on-line shopping will create opportunities for “responsive” retailers who can shape offerings quickly. The increased demands now evident in dynamic consumer behaviour will push service levels even higher so retailers will have to be light on their feet to give outstanding user-experiences. We expect to see a number of transactions for high quality on-line retailers in particular, we also expect to see M&A in other areas of consumer including lifestyle events / experiences, outdoor apparel and equipment, travel and ed-tech: we believe there will be increased consumer demand for education delivered remotely via websites that both generate and distribute content.

Software and Services – the talk of data, data, data has been with us for some time but we expect to see this translate into more M&A activity in 2016 as people start to understand and monetise the data generated from within. More companies are entering the data analytics arena and are now beginning to scale up to a size to attract investment. We expect to see a number of investments and M&A transactions around the transition to cloud, as well as investment in application software for vertical industries. We also believe the increased awareness of the vulnerability of customer data generated by some high profile attacks in 2015 will generate investment in a number of cyber-security entities that can bring resilience to protecting data.

Healthcare – with the election and Autumn statement behind us we expect to see more M&A activity in healthcare than in 2015. We particularly expect to see investment in businesses that facilitate efficiencies and savings for the NHS. In particular we are forecasting M&A activity in areas such as workflow management / bed management software, technologies that empower home care and monitoring versus hospital care provision, occupational health and well-being with increased corporate responsibility on the employer.

Communication Technology – the whole area circling communication technology is moving apace. As we move from an era of 3G and 4G to even faster data transmission through 5G and beyond, it is clear there are investment opportunities for both private equity and corporate acquirers. We expect to see more M&A activity around telematics, M2M / the Internet of Things, digital home infrastructure linked to insurance and in the measurement / testing sector (which is increasingly being delivered remotely by technology). 2016 will see M&A across all areas of hardware, software and service provision to empower the rapid increase in bandwidth in communication technology.

About Beech Tree Private Equity

Beech Tree Private Equity was formed with the vision to create a new type of investor. An investor to work in real partnership with management teams/ founders to create category-leading businesses in fast-growth sectors. We want to work with like-minded driven management teams to grow their businesses, providing capital, expertise and connectivity to collectively create real value growth. We will invest between £10m and £30m into UK headquartered businesses providing funding for Management Buy Outs, Secondary Capital (to provide partial cash out for founder shareholders) along with Primary Capital (to accelerate growth organically or through acquisition).

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