UK remains top destination in Europe for M&A investment

According to the annual M&A Attractiveness Index Score, published by the Mergers and Acquisitions Research Centre (MARC) at Bayes Business School (formerly Cass), the UK remains the top destination in Europe for inbound and domestic M&A investment.

Despite ongoing economic uncertainty, including soaring inflation and interest rates, as well as the lingering effects of both Brexit and COVID-19, the UK has retained its ranking as the top target in Europe for the second year running.

Globally, the UK was ranked second, behind only the United States. Having been ranked third last year, the UK has now overtaken Singapore as the second most attractive M&A destination worldwide. Singapore (3rd), Canada (4th) and South Korea (5th) comprise the rest of the top five.

In Europe, the UK was followed by Germany in 2nd (6th globally), France 3rd (7th globally), Netherlands 4th (8th globally), Norway 5th (9th globally) and Spain 6th (10th globally). Italy rose 12 places to 21st, marking the biggest improvement within the top 50.

Regarding the leading trends for countries within the top 10, the report found that ESG was the leading market opportunity for M&A in Canada and Norway, while Singapore and the Netherlands were defined by regulatory and political factors and technology was the key driver in South Korea.

Largely as a result of the ongoing impact of the COVID-19 pandemic, socio-economic issues were the leading market challenges facing six of the top 10 countries. Russia’s war in Ukraine continues to drive economic instability across many developed markets.

Commenting on the findings, Bayes Senior Research Fellow Dr Naaguesh Appadu said: “The rise in protectionism around the world and the invasion of Ukraine by Russia have all led to economic instability in developed markets. However, these events have also encouraged the rapid growth of domestic and inter-regional M&A activity in many countries within these markets, along with cross-border deals between developed and emerging countries.”

“Our latest report shows that the UK is leading the European region, as it is ranked second in the global country list followed by Germany, France, Netherlands, Norway and Spain in sixth, seventh, eighth, ninth and tenth positions, respectively. For Asian countries, Singapore leads the region in third position of the global index followed by South Korea in fifth.”

“For the UK, it is notable that it has retained this position for a second year despite the issues associated with Brexit.”

The index, which is produced by Dr Appadu, has been running since 2009 and evaluates the capacity of countries to attract and sustain M&A activity. The ranking is based on a weighted average composite of 21 indicators aggregated into six factor groups: Regulatory and Political, Economic and Financial, Technological, Socio-economic, Infrastructure and Assets, and Environmental, Social and Governance (ESG).

The final score is reached by weighting 75 per cent to the index, while the remaining 25 per cent is weighted to each country’s domestic and inbound cross-border M&A activity over the past year.

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