Financial advisory firms Cenkos Securities and Finncap have agreed to merge in an all-share deal. The news comes just months after larger peer Panmure Gordon abandoned its plan to acquire Finncap after the companies failed to reach an agreement.
A dearth of IPO activity and an increasing number of companies going private has deprived financial advisers of publicly listed clients. Both Cenkos and Finncap—which specialize in advising public companies and offerings—have seen their share prices drop by almost 50% over the past year amid increasing market volatility.
The fact that fewer PE firms are looking to exit via public market IPOs has compounded the issue.
While few public market exits materialize, the opportunity for PE-backed take-privates has grown as depressed valuations sparked a bargain hunt among firms with dry powder to deploy, especially in the UK.
For financial advisory companies such as Cenkos and Finncap, having a client bought by a PE firm can hurt their revenue-making capabilities.
Services such as equity raises and PLC M&A deals can’t occur when a company has been taken private, therefore these firms can be impacted by PE firms looking to make the best of declining market conditions.
Read more: 2022 Annual European PE Breakdown
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