Sellers accelerate UK M&A deals amid threat of CGT increase
Despite a decrease in UK mergers and acquisition (M&A) deals in Q2 2024, activity is set to ramp up in the lead up to the Autumn Budget amid fears of a capital gains tax increase, says RSM UK.
Today’s ONS quarterly M&A statistics show the total combined number of cross-border and domestic M&A transactions involving a change in majority share ownership was 385 in Q2 2024, down from 463 the previous quarter. The value of domestic M&A (UK companies acquiring other UK companies) was £2.6bn in Q2 2024, £1bn lower than the previous quarter, and flat on Q2 2023.
The value of inward M&A (foreign companies acquiring UK companies) in Q2 2024 was £5.0bn, a £0.6bn decrease on the previous quarter, and £1bn less than Q2 2023. The total value of outward M&A (UK companies acquiring foreign companies) in Q2 2024 was £4.2bn, £0.4bn less than Q1 2024 but £2bn higher than Q2 2023.
James Wild, partner and head of M&A at leading audit, tax and consulting firm RSM UK, said: “While subdued deal activity continued in Q2 2024, we’re increasingly seeing a renewed confidence among businesses and a willingness to invest, driven by stabilising economic conditions and the certainty a new government brings. More recently, there’s an impetus among overseas buyers eyeing up UK companies and private equity investing in platform transactions – an initial company that paves the way for more acquisitions.
“The focus now for business owners is the upcoming Autumn Budget and the looming threat of an increase in capital gains tax, as sellers rush to get deals over the line. As a result, we expect the real increase in deal activity to be in the second half of the year. For those that don’t manage to complete deals ahead of the 31 October, their decision of whether to sell up or press pause and hold onto their business will weigh heavily on the outcome of the Budget.
“Key industries such as business services, infrastructure, technology and industrials continue to attract the most interest, but with signs of consumer spending picking up we may start to see more opportunities in this sector going into 2025.”
