UK M&A activity set to recover as investor confidence returns says RSM UK

Today’s ONS quarterly M&A statistics show a decline in UK mergers and acquisitions (M&A) activity. But the market should start to recover soon as investor confidence cautiously returns, says RSM UK.

The total combined number of cross-border and domestic M&A transactions involving a change in majority share ownership was 426 during Q1 2024, a slight decrease from 444 the previous quarter. The value of domestic M&A (UK companies acquiring other UK companies) was £3bn in Q1 2024, flat on the previous quarter, and £0.9bn higher than Q1 2023.

The value of inward M&A (foreign companies acquiring UK companies) in Q1 2024 was £6.1bn, down £4bn on the previous quarter, and £5.6bn less than Q1 2023. The total value of outward M&A (UK companies acquiring foreign companies) in Q1 2024 was £4.4bn, £0.9bn higher than Q4 2023 but £0.3bn lower than Q1 2023.

James Wild, partner and head of M&A at RSM UK, said: 'UK M&A activity has been subdued this past 18 months, but glimpses of an improving market are appearing as investor confidence makes a comeback. With the UK’s economic recovery on the right path; inflation set to fall back to 2% and interest rate cuts on the horizon, this will provide further certainty to the M&A market – which is crucial to getting deals done.

'Plus, with the announcement of the general election coming sooner than expected, this may prompt some sellers and buyers to get deals over the line ahead of any potential tax changes. At the same time, having greater certainty over the next government earlier on in the year sets the stage for M&A activity to return to normal levels by the end of 2024.

'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.'