Mergers and acquisitions (M&A) activity targeting UK and Ireland grew sharply to 1,802 transactions in 2018, up 27% from 1,414 deals in 2017. While equity investors had a difficult Q4, with the S&P dropping more than 14% and the markets nervous about the ongoing Brexit negotiations, UK M&A ended the year on a positive note. Globally, deal volumes rose nearly 2% overall to 12,309 with 2,762 transactions completed in Q4.
The data from Livingstone, the international mid-market M&A firm, reveals that the UK & Ireland remains the go-to destination for M&A, with growth fuelled by foreign rather than local investors. The percentage of acquisitions by foreign acquirers rather than domestic buyers rose in 2018, climbing to 44% from 29%, as international investors continued to invest in the strength of the British mid-market and make use of the temporary weakness of the pound. The Americas accounted for almost half (46%) of UK and Ireland’s inbound deals, followed closely by Europe (40%). Deals in Europe (including UK & Ireland) reached 4,941 in 2018, up from 4,649 in 2017.
Daniel Domberger, partner at Livingstone, comments on the findings:
“Overseas investors remain undeterred by the ongoing political turbulence facing the UK and Ireland, and mid-market investors are not letting headlines distract them. However, the outlook for 2019 is still unclear as microclimates are never completely sheltered from the prevailing winds. Mid-market companies remain attractive acquisition targets right now, but if the economic contraction that the stock market drop intimated in December strikes, potential buyers could find raising money more difficult and sellers may find themselves in a much more price-sensitive environment.”
The UK and Ireland’s business services closed the highest number of deals (731), with almost a quarter (23%) stemming from financial services. This was followed by media & technology (392 deals) with computer software companies attracting the highest number of transactions. Industrials secured a total of 293 deals, closely followed by the consumer sector with 280 deals. The healthcare industry had 106 deals in 2018, an increase of 14% on the total number of deals from 2017.
Daniel Domberger continues:
“The business services sector remained resilient throughout 2018 and continued to contribute to business, investment and employment growth. This sustained demand for the sector is not excepted to slow in 2019, but there are various barriers to growth which the industry will need to overcome. These include increasing pressure on resources and skills shortages which may lose momentum following Brexit. We can expect businesses to base their growth strategies on talent acquisition and efficient operations in order to combat any shortages in the short-term.”