London's status as a tech hub helping drive transatlantic deals

James Booth
Transatlantic deal flow strong in first half of 2018 (Source: Getty)

London's status as a hub for technology and financial services is helping drive a strong flow of deals between the US and the UK according to audit firm Deloitte.

Deloitte said deal volumes between the UK and US “remained buoyant” in the first half of 2018, with 238 completed deals in the period.

There were 152 acquisitions of UK businesses and 86 US businesses acquired by UK buyers.

This marks an increase over the two-year average but a dip on the record high of 265 deals recorded in the first half of 2017.

Read more: Fintech M&A deals swell to $40bn in first half of 2018

Deloitte M&A advisory partner Aziz Ul-Haq said: “London’s position as a national and global hub for technology and financial services is driving deal activity.”

London is the base for 52 per cent of the buyers of US businesses and 34 per cent of UK businesses acquired by US buyers.

Co-head of global M&A at law firm Freshfields Bruckhaus Deringer, Bruce Embley, said: “Cross border M&A is still very, very active, there has been some very, very good transatlantic deals going both ways but some of the headline grabbing ones more from our cousins across the pond than over this way.”

Transatlantic deals in the period include the acquisition of London tech firm Endava by US software company Velocity Partners and UK-based broker Icap’s acquisition of US energy broker SCS Commodities.

Read more: Oil bankers form advisory firm as price surge fuels deals

Technology is the most active sector accounting for over a quarter of acquisitions, with consumer businesses accounting for 14 per cent, manufacturing 12 per cent and financial services 11 per cent.

However, David Madden, an analyst at CMC Markets warned that weakening market sentiment may hit M&A in the second half of the year.

“At the beginning of the year US markets were hitting all time highs,” he said, “but we could see a bit of a taper off in the second half as sentiment isn’t as strong and when equity markets are down no one wants to borrow money or take risks.”