M&A activity jumps in October as sellers look to complete before CGT increase

M&A activity ramped up in October last year as sellers rushed to get deals over the line ahead of the capital gains tax (CGT) rise announced in the Autumn Budget, says leading audit, tax and consulting firm RSM UK. 

Today’s ONS quarterly M&A statistics show the total combined number of cross-border and domestic M&A transactions involving a change in majority share ownership increased from 147 in September to 186 in October, before falling to 151 in November and 65 in December. There were 402 domestic and cross border M&A deals in Q4 2024, down from 464 the previous quarter. The value of domestic M&A (UK companies acquiring other UK companies) was £8.6bn in Q4 2024, £6.7bn higher than the previous quarter, and up on Q4 2023 (£3.0bn).

The value of inward M&A (foreign companies acquiring UK companies) was £4.5bn in Q4 2024, a £5.9bn decrease on the previous quarter, and £5.6bn less than Q4 2023. The total value of outward M&A (UK companies acquiring foreign companies) in Q4 2024 was £1.4bn, £2.5bn lower than Q3 2024, and £2.1bn lower than Q4 2023.

James Wild, partner and head of M&A at RSM UK, said: “While 2024 failed to provide a reawakening of the deals market, October saw a flurry of activity, as sellers rushed to complete ahead of the CGT increase announced in the Budget. On the plus side, the rise in CGT wasn’t as severe as originally feared, so going forward, it shouldn’t deter business owners from pushing ahead with their plans to sell.  

“The tax announcement that is perhaps more significant for businesses is the rise in employers’ National Insurance contributions (NICs), which will see those with a large workforce hit particularly hard. Higher NICs are likely to hinder growth plans and will have a knock-on effect on the attractiveness of a business, valuations and investor appetite. It’s crucial businesses consider how to mitigate these costs, including improving productivity and investing in technology.

“Deal volumes appear to be improving in early 2025, and we expect private equity investment in particular to lead the way, but this will be heavily dependent on economic stability and greater confidence among businesses and investors. However, with growing concerns over potential disruption from US tariffs and a global trade war, there’s a risk a recovery in the deals market could be thrown off course.”