Earlier this month I was asked to give a talk at the quarterly Investors Circle Event at the East India Club in London.
My topic was a ‘View from the North’ about what I was seeing in my home territory around the economic pulse, dealmaking and the general views of northern entrepreneurs.
I have therefore adapted the talk for this article and taken out the risky jokes!!
The North West Region
Obviously as a starting point and a reality check, when it comes to pretty much every measurement and metric, it is London and then everyone else, but in terms of some key information about the region:
The North West of England consists of Greater Manchester, Lancashire, Cumbria, Cheshire and Merseyside. A region with a proud industrial past.
It is the UK’s third largest economy contributing over £270bn to GDP, behind the South East and of course London.
Home to many key sectors:
- Manufacturing and the rise of Advanced Manufacturing in the region
- Tourism including the Unesco World Heritage site, The Lake District
- Entertainment – The £265m Co-op Live arena opened in Manchester. It is the largest in Europe by capacity
- Sport – especially football
- Energy – and in particular Nuclear
- TV and Film – BBC and ITV at Media City
- Financial Services
- Cars including Bentley Motors
- Digital and Creative
- Fintech
- Life Sciences
- Growth of AI (some big projects out of Liverpool now including Kyndryl)
- Culture especially music
Some of the major companies in the region include BAE Systems, Co-op Group, Unilever, Bentley Motors, Peel Group, BNFL, The EG Group, JD Sports, B&M Retail and Shop Direct.
Turning to Manchester
- Represents the largest city region economy outside London, with a gross value added (GVA) of £78.7 billion.
- Access to 7.2 million people within an hour’s drive of Manchester and 22 million people in 2 hours (notice I didn’t say by train though!! – train connectivity still isn’t the best and the less said about HS2 in the North West the better).
- According to EY the UK’s leading city outside of London for attracting Foreign Direct Investment.
- Largest regional fintech ecosystem outside London.
- A strong entrepreneurial culture with more new business startups per capita than anywhere outside London.
- The cost of doing business is significantly lower than anywhere down south.
- Home to 5 Universities.
- Manchester Airport is the 3rd busiest in the UK.
It is also true that it rains quite a bit up there too!! Although whilst it has a reputation for rain and being wet, it is only number 10 on the top 10 rainy cities in the UK!!
The Impact of the Manchester Bomb
It is fair to say that Manchester has changed beyond all recognition since the IRA bomb in June 1996. Amazingly I had only moved up there 2 weeks before it happened.
Naturally it was a devastating event and unbelievably no one died in the blast, but it acted as a huge catalyst for Manchester’s transformation and regeneration, leading to a more modern and prosperous city. The damage provided an opportunity for a comprehensive rebuilding and re-development plan, attracting significant investment and shaping the city’s future. With the usual northern humour it is often said that the bomb was the best thing to happen to Manchester because of what was then created.
Notable Developments in Manchester
- The Northern Gateway Development in North Manchester creating a ‘nationally significant’ employment site and would be the largest employment site in Greater Manchester with 6.5 million square feet.
- Nobu Hospitality (backed by Robert De Niro) plans a hotel, restaurant and apartments in a new 76 storey skyscraper in Manchester. It will be the 3rd tallest building in the UK behind the Shard and 22 Bishopsgate.
- Manchester United and its Old Trafford football stadium development. Early days on this one as Man Utd are keen for others to pay for it but this would be a Lord Foster designed 100,000-seater stadium costing £2bn and wider redevelopment of the area including building 17,000 new homes. Could deliver £7bn to the UK economy and expected to be the biggest regeneration project in the UK since London 2012 Olympics. Personally, as an Arsenal fan I would knock it down and build a shopping centre instead!!
The Market in the North West Region
Turning to the corporate finance market and funding/investment market in the North West:
There was a rise in the number of Mergers and Acquisitions (M&A) deals in 2024 – up by 16%, although the overall value remained largely unchanged. It was the largest deals that were impacted as there were less of them, but the regions three largest deals in the year all saw significant UK assets transitioning to overseas ownership:
- Spanish energy firm Iberdrola acquired 88% of electricity North West for £4bn
- Private equity firm EQT and Singapore’s sovereign wealth fund GIC acquired smart meter and energy firm Calisen for c£4bn
- US Private Equity firm KPS Capital acquired INEOS Composites for £1.4bn
Private Equity were involved in more of those deals than ever before and up 20% year on year. The professional services sector was the most prolific source of activity in the year
2025 certainly started off more slowly on the M&A side and no surprise given the large increase in deals that occurred in October, pre-budget but we have noticed a lot more enquiries over the past 6 weeks or so.
Appetite for Venture Capital & Private Equity in the North West
However, Venture Capital investment into start-up and scaling businesses has accelerated in the opening quarter of 2025. Businesses received £138m from VC investors in the first three months of 2025 representing an 86% increase on the final quarter of 2024. The level of investment more than tripled on the same first quarter of last year.
Twenty-six investments in the region highlighted ‘sustained appetite’ for VC investors looking to support the North West community. Companies in the IT and digital sector secured the highest volume of investments, including a £15.8m investment secured by digital assurance tech provider OneID, and £14.8m raised by customer service software developer Plain.
Private equity investment in the North West also increased significantly in 2024. Investment in the region grew by 41% in 2024, totaling £20bn. The volume of deals in the region increased by 23% as volumes returned to 2022 levels. Encouragingly, the overall level of investment increased by 71% compared to 2022. Investment accounted for more than 12.5% of all new PE backing in the UK, and was the most active region outside of London, which continued to deliver the greatest interest, attracting £78.1bn of investment.
Strong Presence of Debt and Equity Providers in the North West
There is a strong presence of both debt providers and equity providers in the region and indeed right across the North, and I should also mention the Northern Powerhouse Investment Fund, originally a collaboration between the British Business Bank and ten Local Enterprise Partnerships (LEPs) across the North. It has just hit a significant milestone of facilitating over £1bn of direct and private sector co-investment to new and growing businesses across the North.
The latest incarnation is the Norther Powerhouse Investment Fund II which plans to deliver £660m of funding to new and growing businesses across the North via its various funds and fund managers. This ranges from debt funding of £25k to £2m and/or equity funding of up to £5m. The debt is provided through the likes of FW Capital, Mercia and River Capital, and the equity is provided through Praetura, Mercia and Maven.
So overall there is a strong professional community of advisers, investors, debt and equity providers, lawyers, accountants and corporate finance advisors, ready to do deals.
It is said that Manchester is the second largest private equity hub in Europe behind London. However, there is still much work to be done because there is a widespread belief (rightly or wrongly) that once the cheque size gets to a certain amount, you must come down to London.
There can also be a little bit of an expectation from the professional community that regional deals will just come their way. An example of this was one we did last year that I mentioned earlier, consisting of a buyout of a business headquartered in the North West. The senior debt was provided by the Manchester team of a UK debt funder, but the private equity ended up coming from an Edinburgh based firm, when really a North West PE firm should have been there on that deal. As the advisor we must find the best and right provider and for this deal that was an Edinburgh based PE house.
General Comments on The North West
In terms of some of the things we are seeing on the ground in the North now.
Fair to say a lot of entrepreneurs and business owners seem a bit battle weary now on the back of the whole economy being talked down, the rise of NI and generally business appearing to get a bit of a raw deal. However, I would say I see this everywhere not just the North West.
The pre-October rumour mill on capital gains and in particular the Business Asset Disposal Relief had a big impact on the corporate finance market as the numbers of deals rose very sharply pre-October with people bringing forward their company sales before that Autumn Budget.
We’ve seen the impact of tougher trading conditions and the impact of the increase in the Employers National Insurance Contributions on some businesses especially in the care sector. We have recently had to negotiate and agree new banking covenants for several clients where the impact means they are unable to meet planned covenants that previously they have always met.
We are also seeing some impacts on valuations in part due to the NI situation. If businesses are not able to offset these big rises in costs, then it will impact the valuation and we have again seen this in the care sector, where many are unlikely to be able to pass on all these costs.
We are currently getting more enquiries for people wanting to sell their business than to buy.
There is a lack of quality and data/information used to manage businesses. Many times, we go into a business and even some of the basic financial information is unavailable or outdated or both, and they really have no idea whether the business is trading profitably or not. It is very difficult to make decisions on the future without the right information.
There is also a lack of understanding/knowledge of the funding options open to businesses. This is not helped by some of the professionals because many of them are just not aware of what funding options there are, and how diverse they are and how many of them. We see it as our role to spread the word on what is out there and the options available to businesses.
We will continue to do this and hope to help more businesses snowball their growth and plans.