Deal volumes down but M&A market showing ‘resilience’
New figures published today by the Office of National Statistics reveal there was a total number of 459 domestic and cross-border M&A deals in Q3 of 2022. This is nine transactions lower compared with Q2 (468), and 159 fewer than Q3 in the previous year (618).
Although overall deal volumes are slightly down, UK companies remain attractive to foreign investors, with the total value of inward M&A deals up from £11.1bn in Q2 to £25bn in Q3. During the same time, UK businesses were also busy acquiring companies abroad with the value of outward M&A deals also up in Q3 at £7.6bn, an increase from £4.8bn in Q2.
Against this backdrop the value of domestic M&A deals was down £0.7bn, to £2.6bn in Q3 from the previous quarter of £3.3bn. Volumes were also lower with a total of 148 deals completed in September 2022, down from 166 in June 2022.
James Wild, partner and head of M&A at RSM UK, said: ‘The M&A market is showing resilience as it navigates its way through challenging economic times; and the level of deal activity appears to be on a par with pre-covid levels after what has been a very high amount of deal activity over the past two years.
‘The war in Ukraine, the cost-of-living crisis and the pace of political change in recent months will have caused some nervousness but deals are still being done.
‘These latest figures show the UK continues to be an attractive proposition for overseas investors, with the weaker pound supporting acquisitions here. We don’t expect to see deal volumes drop hugely in 2023 despite some volatility in the markets. Instead, our experience suggests volatility will lead to opportunities as businesses take stock, refocus and look to grow. As well as overseas interest, we are seeing an increased appetite for corporate carve-outs as companies divest their non-core assets, and businesses consider debt financing to cushion them ahead of any potential challenges.’