Clearwater, the Midlands’ biggest corporate finance boutique, is seriously looking at re-opening an office in Nottingham – the city of its birth – following its acquisition by US banking giant KeyBanc.
The firm, which has completed more than 1,000 deals over the past two decades, says it remains committed to both the regions and mid-market deals and will not follow other dealmaking firms that have “almost exited the regional market to concentrate on larger transactions.”
Late last month Clearwater revealed that it was being acquired by Cleveland-based KeyBanc. The deal is subject to regulatory approvals, including approval by the Financial Conduct Authority, but should close in the second half of the year. It is the biggest acquisition of a Midlands-based dealmaking firm since Birmingham-based Catalyst Corporate Finance was bought by Spain’s Alantra a decade ago.
“We’ve not forgotten our roots,” said chief executive Mark Taylor. “A lot of our competitors who’ve gone through similar transactions have almost exited the regional market to concentrate on larger transactions.
“We’re saying the opposite. We’re still massively passionate about the regional market and doing the first-time business sale, the primary buyout for a business based in Warrington or Wolverhampton.”
Although Clearwater was first registered in Nottingham, it quietly closed that office during Covid. Taylor said that the hope was to reopen the office.
“We have aspirations to do something in Nottingham, where we originally started,” he added. “The office closed during Covid, but if we can find the right individual – or individuals – who fit with our culture, we will look at Nottingham and build a team around it.
“On regional commitment – I’ll give you tangibles, because actions speak louder than words. During the year we’ve been in conversation with KeyBanc and we’ve moved to the Birmingham office. We’re looking to move within Leeds – our current office is a bit dusty and we need bigger premises. Ditto Manchester, where we refurbished during Covid but the business has grown at pace and now we’re tight on space.
“Commitment to the regions is not going to change. We can’t forget the value of those regional relationships.”
Founded 23 years ago in Nottingham and Manchester as a mid-market corporate finance house selling businesses for entrepreneurs, Clearwater – which was named Corporate Finance Team of the Year (Large) at Insider’s UK Dealmakers Awards in February – now has offices in London and Birmingham, and a network of alliances stretching across Europe. It employs 130 people – including 24 partners – and turns over about £50m, doing deals of up to £500m. Its typical deal size is about £100m enterprise value.
“This business was born out of the regions and has been a huge success because of it,” added partner Michael Loudon. “Some competitors will suggest Clearwater is vacating the mid-market or the regional space, but the message is simple: we’re not finished here.
“We’re doubling down in a way that doesn’t move away from our roots, but keeps doing what we’ve done successfully for 23 years.”
Clearwater’s relationship with KeyBanc goes back a decade. Although it had successfully built up a network, Clearwater International, across Europe – Denmark, Sweden, France, Germany – it found the US too difficult a market to crack.
“Finding a multi-sector, multi-jurisdictional entity in the US that we could rebrand as Clearwater was beyond us – we couldn’t find the right critical mass,” said Taylor. “So rather than search for a unicorn we’d never find, we struck up a relationship with KeyBanc. We started talking to them ten years ago, and around 2020 put that into a formal collaboration agreement.”
KeyBanc wants to grow income from its investment banking division from $750m to $1bn. So a year ago it started talking to its partner about using Clearwater as a way of growing its M&A and corporate finance work in Europe – where it had no presence – and was interested in buying the UK firm.
“KeyBanc wants us to be their growth platform – adding more service lines, deeper sector coverage, deeper regional access,” said Loudon. “That matrix of region and sector is going to be crucial going forward.
“We’ll run independently. While we’ll keep on with those mid-market transactions, we also have aspirations to do bigger deals and stretch the top end of the market: KeyBanc will bring the resources and firepower to do that.
“They’ll also open up deeper relationships with US buyers and investors, a big feature of the M&A market over the last decade.”
However, they were keen to stress that the deal would not see Clearwater becoming an outlet for KeyBanc to deploy capital in Europe. It would still work with banks, lenders and private equity houses such as “LDCs, the Palatines, the NorthEdges of this world”.