Total value of UK M&A deals rises by £15bn in 2019
The total value of mergers and acquisitions (M&A) deals completed by the UK financial services industry rose almost £15bn in 2019, even though the number of such deals dropped considerably.
According to data from Big Four auditor EY, financial firms completed £39.8bn worth of deals last year, up from £24.9bn in 2018.
Read more: Financial sector contributed record level of UK tax in 2019
The substantial increase came despite the total number of deals falling from 236 to 211.
The majority of the value was generated by a small number of extremely large deals, such as the London Stock Exchange’s (LSE) £27bn (£20.7m) takeover of data firm Refinitiv.
Sector-wise, banking deals were exclusively responsible for the value increase, growing from £9.1bn in 2018 to £30.7bn this year, led chiefly by the LSE deal.
Both the insurance and the asset management sectors saw decreases, from £11.8bn to £7.3bn and £4bn to £1.8bn respectively.
Tom Groom, transactions advisory leader for EY’s UK financial services division, said he was hopeful the decisive General Election result would give firms more certainty over Brexit, paving the way for firms to progress their growth plans in 2020.
He said that sector’s performance in 2019 was ” impressive in such a turbulent and uncertain year”, and that further big ticket deals “should come as less of a surprise” with the new majority government.
However, he warned that “it is too early to say if the Brexit headwinds that have plagued activity levels for some time are finally beginning to lift.”
The data showed that Brexit concerns had had a considerable impact on the sector, with the value of deals done by non-UK firms acquiring UK targets halving – from £11.6m to £5.5bn – in 2019.
Read more: LSE shareholders give green light for $27bn Refinitiv deal
There were also fewer cases of UK firms acquiring international targets, although value rose once again thanks to the LSE deal.
Aside from Brexit, Groom said that major structural shifts such as the high costs of regulation, the onset of open banking, and tech investment opportunities would all impact financial services firms.