UK M&A is making a comeback in the market. Trade and private equity firms are shifting their acquisition strategies towards resilient 2020 businesses or those poised for strategic realignment.
A RETROSPECTIVE GLANCE
In the three months to September 2020, the UK witnessed a £4.4bn surge in business acquisitions, a remarkable leap from the preceding £400m in April-June and £3.2bn in January-March.
Concurrently, acquisitions of UK businesses from abroad rose to £2.9bn, a climb from the previous quarter’s £2.1bn – although it trailed the £5.1bn recorded in January-March.
Outbound acquisitions by UK firms surged from 22 in April-June to 42 in July-September.
The ONS reported a total of 273 completed transactions involving UK companies in domestic and cross-border M&A during September 2020. This marked a 176 increase from the June quarter but a decrease from 435 in the same period of 2019.
Full report available here.
GLEANING FORWARD
Sectors that demonstrated restraint amid the pandemic are set to drive the next wave of activity. For instance, the consumer sector shows increased M&A involving pandemic-affected assets, led by financially robust rivals. Innovative companies with strong customer ties are also fueling acquisitions.
Private equity firms active in 2020 will ramp up efforts as industries shift during the expected recovery in 2021. Private capital stands poised to capitalize on anticipated value creation. The rise of special purpose acquisition companies (SPACS) could introduce new capital avenues this year.
In Europe and the US, Brexit and potential policy shifts post-US election will shape corporate strategy and capital dynamics. With UK M&A values up 40% in 2020 and 79% of US firms considering accelerated M&A strategies post-election, 2021 holds promise for robust M&A activity.
Optimism reigns in 2021 with vaccine availability heralding gradual normalization. However, Brexit, tax policy shifts, and restriction-easing timelines will linger. Amid ongoing uncertainty, businesses must stay agile and vigilant on costs.
Venture Corporate Finance, a middle-market M&A advisory, offers expert guidance for business sales, capital raising, restructuring, and acquisitions. Tailored advice and solutions for specific objectives are our hallmarks.
For details on corporate finance and M&A services, connect with Venture Corporate Finance.
