Deal activity in the UK accelerated at the start of the year as lockdown restrictions eased, with private equity and corporate acquisitions recording their strongest ever quarter of growth in Q1 2021 according to RSM*.
The volume of deals was up by 143 per cent compared to Q2 2020, the lowest quarter since 2009. The recovery was fuelled by the UK capital gains tax changes that loomed at the end of the quarter, emerging post-COVID optimism and confidence regained in boardrooms. During 2021 Q1, deal volumes were up by 25 per cent compared to the same quarter in 2020 which was pre-UK lockdown.
The pause in activity last year resulted in uninvested capital which is expected to be unleashed during the more certain times of 2021. Buoyant markets and a successful vaccine programme can be expected to carry deal momentum for the rest of 2021.
Commenting on the volumes, Jasper van Heesch, Private Equity Coverage Director at RSM, said: ‘After a challenging year for many businesses, the deals market has taken off more than we could have anticipated. There has naturally been a lot of concern around whether there would be appetite – or confidence – from businesses to complete deals in a turbulent market.
‘The UK boom has been impressive and seems set to continue. A persistent capital overhang in private equity, some strong corporate balance sheets and the need to restructure others, suggests that the rest of 2021 will be strong too.’
*Deal volume data source: PitchBook Data Inc