UK M&A deals dip 31 per cent over last quarter

The number of mergers and acquisitions involving UK companies dipped over the last quarter, according to official figures released today.

Data from the Office for National Statistics shows the volume of M&A deals involving UK firms fell 31 per cent over the last quarter, dipping to 381 in the second quarter from 556 in the first quarter of this year.

Domestic M&A activity experienced a sharp decrease, falling to 57 in April 2021, down from 132 in March.

The number of overseas companies acquiring British firms fell from a historic high of 90 in March, to 38 in May, but jumped to 45 in June.

However, despite the fall in aggregate M&A activity, the value of deals in which a foreign buyer acquired a UK company surged to £27.7bn in the second quarter, up from £19.4bn in the previous quarter.

Concerns are mounting over British firms falling prey to overseas, private buyers capitalising on their relatively lower valuations. British supermarket chain, Morrisons, and aerospace defence manufacturer Meggitt have been the subject of takeover battles by US firms recently.

The emergence of special purpose acquisition companies, or SPACs, has helped boost M&A activity in the UK over the last year.

Phillip McCreanor, head of investment bank Lincoln International, said: “Private equity deal flow is so strong in the UK that some transactions have been slowed down by due diligence capacity constraints.”

“There is a huge volume of global private equity and debt fund dry powder chasing deals, so prices are set to remain at very high levels, especially for leaders in segments underpinned by technology.”