UK M&A expected to rebound from quarterly decline

New figures have revealed that the number of UK M&A deals declined during the first quarter of the year. However, RSM UK have said that the dealmaking market should recover quickly as investor confidence returns.

New quarterly figures from the Office for National Statistics (ONS) showed that there was a total 426 cross-border and domestic UK M&A deals involving a change in majority share ownership during Q1 2024, slightly down from 444 in Q4 2023.

The value of domestic M&A (deals involving a UK buyer acquiring a UK company), meanwhile, remained level at £3 billion in Q1 2024, although this was a £900 million increase on the figure recorded in Q1 2023.

The value of inward M&A (overseas buyers acquiring UK companies), however, fell to £6.1 billion in Q1 2024, down £4 billion (39 per cent) from Q4 2023 and a drop of £5.6 billion from Q1 2023. According to the ONS, this total was the lowest deal value for inward UK M&A since 2020.

In total, 144 UK companies were acquired by a foreign buyer during the first quarter of the year, down 16 per cent from 171 in the previous quarter. These low figures have been characterised as a “carryover” from the economic uncertainty of 2023, a year in which UK M&A activity slumped as a result of rising inflation and interest rate increases.

In recent months, however, there has seemingly been renewed interest in UK companies from foreign buyers, with a flurry of recent high-profile approaches for prominent companies such as Anglo American, Royal Mail and Hargreaves Lansdown.

The value of outward M&A (UK buyers acquiring foreign companies) was £4.4 billion in Q1 2024, up £900 million compared to the previous quarter but down £300 million from Q1 2023.

RSM UK partner and Head of M&A James Wild said that, while UK M&A activity had been “subdued” over the past 18 months, there were signs of improvement appearing due to strengthening investor confidence.

He continued: “With the UK’s economic recovery on the right path; inflation set to fall back to 2 per cent and interest rate cuts on the horizon, this will provide further certainty to the M&A market – which is crucial to getting deals done.”

Wild added that the unexpected announcement of a General Election in July could lead to some buyers and sellers moving quickly to finalise deals ahead of a potential new government possibly making tax changes. He also emphasised that the early timing of the election would provide greater certainty earlier in the year and “sets the stage for M&A activity to return to normal levels by the end of 2024.”

Wild concluded: "While appetite to sell is building and sellers’ price expectations are realigning to current market conditions, deals are still taking longer to complete. That said, after sitting on their hands for some time, the private equity market is starting to make its return. Pressure to deploy the build-up of cash will likely see sectors such as business services, technology and healthcare benefit the most."


For business owners looking to capitalise on an M&A recovery, early preparation will be crucial to securing a high-value sale

The UK services sector has seen strong trading activity recently and could be a key part of a recovery in dealmaking

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