Volume down yet value up on domestic and inward M&A in Q2

Quarter two (Q2) saw the value of domestic mergers and acquisitions (M&A) involving UK companies rise noticeably compared to the previous quarter, according to new figures published today by the Office of National Statistics.

Whilst the volume of transactions saw a significant reduction on the previous quarter from 214 to 155, the value rose from £16.5bn in Q1, nearly doubling to £30bn in Q2.

The increase in total activity was driven by acquisitions made abroad by UK companies. There were 24 such transactions in Q2 totalling £18.3bn. This was the largest value for outward M&A transactions recorded since Q1 2011 (£19.8bn), which reflected one high-value transaction.

There were 44 completed inward M&A transactions (foreign companies acquiring UK companies) in Q2, worth £2.9bn. This was down in terms of both number and value compared with Q1 (70 acquisitions valued at £9.5bn).

Provisional estimates illustrate that while the value of secured inward M&A’s in Q2 was £2.9bn, the value of disposals was £3.8bn – thereby marking the first period of recorded net disposals of UK companies by foreign companies since Q4 2002.

Q2 saw 66 successful domestic acquisitions (UK companies acquiring other UK companies) worth £4.0bn, down in both number and value terms compared with Q1 2017.

Rob Donaldson, head of corporate finance at RSM, comments:

'These figures reflect a tightening M&A environment here in the UK, fuelled by increasingly nervous sentiment concerning the future of the UK economy and uncertainty resulting from Brexit. This trend will have been accentuated by the snap election in June. Domestic and overseas investors are cautious, and will remain so until we start to see an outline of the UK’s likely future trading relationships with the EU. These conditions are echoed by slowing activity in the real economy and in a slowing housing market.'