Deal making in London is slowing to its lowest level in 14 years as private equity declines
- M&A transactions involving the UK have fallen by 45% compared to last year
- According to the results, the value of year-to-date deals is at its lowest level since 2009
New evidence shows the value of mergers and acquisitions (M&A) involving the UK fell to its lowest level in 14 years in 2023.
According to LSEG Deals Intelligence, M&A deals involving the UK have been worth a total of £144.7bn in the year to date, down 45 per cent year-on-year.
The value of deals involving the UK is at its lowest level since 2009, amid the turmoil of the global financial crisis.
Weakling: The value of M&A deals involving the UK has fallen to its lowest level in 14 years this year
UK-targeted mergers and acquisitions have reached around £77 billion so far this year, just over half the value recorded in the same period in 2022, after domestic mergers and acquisitions increased by 48 percent and inbound transactions had declined by 49 percent.
The UK is the third most attacked country in the world this year after the US and China, with UK targets accounting for 5 per cent of global mergers and acquisitions announced so far in 2023, according to the findings.
65 percent of proposed mergers and acquisitions in the UK involved a foreign buyer, with the remaining 35 percent involving domestic buyers.
According to LSEG Deals Intelligence, the number of “mega deals” is at a six-year low, while the value of private equity-backed deals is at a five-year low despite a “high deal count.”
Lucille Jones, senior manager at LSEG Deals Intelligence, said: “In these uncertain times, with recession looming, M&A deals involving UK companies have fallen by 45 per cent, to their lowest level in fourteen years.”
“We are seeing double-digit declines in both domestic and cross-border deals, and declines are occurring across all sectors.”
She added: “One of the few positive takeaways from our Q3 data is that while the number of deal announcements is down 22 percent year-on-year, it is at an all-time high and has only been exceeded three times in the last fifteen years became.”
“A worrying outlook for the UK economy is dampening enthusiasm for deal-making in UK boardrooms and we are likely to continue to see a cautious approach to deal-making in the coming months.”
Over four thousand deals have been announced so far this year, down 22 percent from last year but the fourth highest deal number in the last fifteen years.
After the value of deals announced in the first quarter of the year fell to its lowest quarterly level since the final quarter of 2009, M&A activity rose 60 percent in the second quarter of 2023 before falling 13 percent in the third quarter, according to LSEG Deals Intelligence, said.
Some analysts expected London-listed companies to be snapped up as buyers took advantage of cheap prices, but a wave of takeovers failed to materialize.
However, some super deals have been struck in the UK. Swedish buyout group EQT’s £5bn takeover bid for Dechra Pharmaceuticals represents the largest deal announced to date involving the UK.