Latest Mergers and Acquisations Report
The latest mergers and acquisitions (M&A) report from the Office for National Statistics (ONS) has just been published. The key points for the first quarter of this year are:
- Domestic acquisitions (UK companies acquiring other UK companies) involving a change in majority ownership fell sharply to 26, from 59 in Q4 2013. This is the lowest level of domestic M&A activity reported since records began in 1969.
- There were 20 acquisitions in the UK by foreign companies, which is one of the lowest levels on record.
- The number of acquisitions abroad by UK companies increased to 26 from 11 in Q4 2013. This remains low compared with historical standards.
- Relatively slow global economic growth, lack of confidence within the M&A markets and the length of time involved to complete transactions are all factors which may have caused an overall decline in M&A activity.
Despite some indicators suggesting tentative improvements in overall credit conditions and an increased appetite for M&A activity, there are still signs that economic pressures may have restricted domestic M&A activity involving UK companies. For example:
- The Office for Budget Responsibility said in March that lending to small businesses remained weak with credit availability slower to improve than for mid-sized and large corporates.
- The Bank of England notes that lending to private non-financial corporations fell by 7.6% in Q1 2014 despite previous forecasts of growth.
So is it all doom and gloom? Well no, not if our clients are anything to go by. Our experience tells us there’s still a healthy appetite for opportunities to both merge and acquire – provided, as always, that the sums add up.