2021 has been a year that has seen appetite for investment from both Private (PE) and Venture Capital (VC) investment firms reach significant levels, with a wall of capital ready to invest in strong businesses. Market momentum was seen early in the year as investors looked to actively utilise capital that had not been deployed in 2020, and paired with the return of investor confidence following the easing of COVID-19 restrictions, we have seen an influx of investment within the market, with no signs of this easing.
2021 can only be described as a bumper year for Scottish M&A activity. After a somewhat lull in the market during 2020, the market was due for a rebound in terms of activity levels and 2021 certainly provided this. The appetite for investment from Private Equity firms has been noticeable throughout the year as investor confidence returned, and we saw these levels soar past those of a pre-pandemic world. M&A activity levels remained healthy as companies looked to generate value and opportunities within the post pandemic growth sectors.
Perceptions of venture capital have changed for the better over the years – and deservedly so. If we go back a couple of decades, there was probably deserved criticism around the heavy-handed approach of some private equity houses, resulting in the not so affectionate nickname vulture capital. It was felt by many that such investors latched onto the assets of a firm in distress and ruled with an iron fist.
We have been encouraged by the level of private equity deals being completed in recent months in Scotland, particularly in the Central Belt, in comparison to historic levels. We have seen investment across a wide range of levels, from very early stage up to Aggreko being taken private following its £2.3 billion takeover by TDR Capital and I Squared Capital in the spring of this year. Overall, there has been very promising activity from private equity houses in Scotland than has been seen in some time.