What have we learned in 2019?


At the close of another politically eventful yet solid year of investment for the mid-market, Armstrong’s collective thoughts turn reflective (and to mince pies and mulled wine). What have we learned over the past 12 months, and what clues does this provide for the coming year?


Below is a summary (3 minute read) of the most interesting, surprising and potentially valuable observations, conclusions and learnings from 2019.


  • More businesses come to market before they are ready. Early pre-bid engagement of advisers avoids time wasting on targets that are not prepared for sale.

  • Valuation polarisation. High quality assets in hot sectors (technology, business services) add several turns to valuation. Whilst it is still a seller’s market, peak pricing and process fatigue afflicts ‘hairy’ assets and out of favour sectors.

  • Less is more. If a DD provider cannot describe a business and its potential in 80 pages, they have probably not understood it.

  • The market acknowledges that hypothesis-led DD delivers better results. Emergent and adaptive scopes are increasingly used to focus on key issues that directly influence the investment thesis…

  • …and they cut across DD streams. Integrating DD providers has never been more important.

  • Digital DD goes mainstream and is perceived as complementary to/integrated with CDD.

  • Investors realise how much value is left on the table during the DD process. Commercial, digital and IT DD are ‘value add’ exercises...if the insights are captured at transaction time and actioned over the investment period.

  • Commoditised, inconclusive, lazy VDD delays deal processes. Top-up buyside CDD becomes more widespread to validate investment hypotheses and capture value for the business post-transaction.

  • Technology, business services and financial services dominate activity; of the 500 businesses Armstrong has investigated during 2019, technology, business services and financial services accounted for 63% (147, 86 and 82 respectively). Travel and industrials were notable quieter than prior years (38 and 19 respectively).

  • Whatever your politics, Brexit and wider political uncertainty has resulted in delayed investment decisions. With the clarity afforded by the surprisingly large Conservative majority, this pent up demand seems likely to be released, which could make H1 2020 very busy indeed.

We hope this provides some food for thought over Christmas, to accompany the physically sustaining kind. Have a great break.


If you would like to discuss any of the issues described, please contact one of the team;

Business & financial services Simon Hemsley 07957 340 534 shemsley@armstrong-ts.com

Built environment & industrials Matt McNally 07894 736 523 mmcnally@armstrong-ts.com

Technology Mike Callow 07894 594 500 mcallow@armstrong-ts.com

Travel Peter Cookson 07871 425 467 pcookson@armstrong-ts.com

Events Richard Sherrard 07392 119 639 rsherrard@armstrong-ts.com

Niche & other Tom Raymond 07762 386 216 traymond@armstrong-ts.com

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