A new survey has found that UK companies are increasingly looking to M&A activity to help them keep up with the changes and challenges affecting their specific industries, with more than half of UK business leaders polled saying they are considering transactions.
The study, from PwC, found that 56 per cent of UK companies view transactions – including M&A deals, divestments, joint ventures and minority stakes – as the most effective way of keeping pace with changing business landscapes and securing the long-term viability of their operations.
The survey revealed a widespread acknowledgement that solely using organic growth is no longer sufficient to keep up with changes, with business leaders recognising that quick, responsive changes are required – something that M&A can more effectively offer. 63 per cent of leaders polled said they would undertake coordinated, strategic change in the next three years.
PwC UK Value Creation Leader Roberta Carter commented: “In a market where competitiveness relies on agility, businesses must make transactions an integral part of their transformation strategy. They need to adapt at speed, but organic growth often loses momentum when set against the demands of day to day business operations.”
“To create the most value, leaders must align transactions with a bold vision. Deals that support the business’s ability to continuously adapt are more likely to succeed. By carrying out transactions and transformation simultaneously, leaders can establish a virtuous cycle whereby both activities unlock more value.”
35 per cent of executives said that they believed their business would not be economically viable without significant changes within the next decade. Keeping up with technology such as generative AI (GenAI) and progress on Net Zero ambitions are seen as key challenges.
60 per cent said they were likely to use transactions to build a workforce with “future-ready” skills, rather than focusing on recruitment programmes or training, reflecting the growing popularity of “acquihiring” as companies seek to add skilled workers as quickly and efficiently as possible.
Transactions are also seen as a core way of accelerating integration of technologies and technology-enabled processes, with seven out of 10 respondents saying transactions were a way of achieving their business’ technology-related goals.
The study also found that many respondents were planning smaller scale transactions, amid ongoing high inflation. 31 per cent said they would limit spending to several small-scale deals, 26 per cent said they would target both larger and smaller transactions, while just 15 per cent said they would look at doing a number of large-scale deals.
However, in some industries, more companies were considering larger transactions. 62 per cent of respondents in both the health and pharma and utilities sectors said they would carry out one large-scale deal, a number of large-scale deals, or a combination of larger and smaller deals.
Lucy Stapleton added: “There are signs that conditions in the deals market are beginning to stabilise particularly in sectors aligned with the megatrends such as energy transition, healthcare and technology where companies are making transformative transactions. As conditions continue to improve and confidence grows, we expect to see a growing number of companies using transactions as a way to transform their businesses.”
Read more on UK M&A trends:
Survey: UK dealmaking should improve within a year
Corporate insolvencies surging as distress continues to grow
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