British M&A activity drops 30 per cent

UK mergers and acquisitions (M&A) activity dropped by nearly a third in the last quarter, according to data released yesterday by accountancy firm Ernst & Young.

The total value of British deals fell by 28 per cent quarter-on-quarter, more than double the global rate of decline.

The figures suggest that as the Eurozone crisis and worldwide economic slowdown continue, UK firms are adopting a more cautious approach to deal making, instead preferring to concentrate on improvements to their existing businesses. “Leading corporates are now focusing more on optimising internal operations to drive growth, profit and volume in favour of acquiring assets,” said Jon Hughes of Ernst & Young. “But when the tide does eventually turn it’s these companies that will be in the strongest position to act and transact.”

The slowdown in M&A could continue into 2013, the research suggests, as firms continue to hold out for more stable macroeconomic conditions. It also notes that the average UK M&A deal takes a record high 40 days to complete.

Asia was one of the few regions that grew deal making activity in the quarter.