Dealmakers have signalled they are ready to shake off market jitters and restart a deals push in the next 12 months, after rampant inflation this year put a stop to last year’s deals frenzy, a new survey has found.
Over 71 per cent of M&A professionals in the UK said that market activity will increase in the months ahead despite most bracing for a reduction in multiples, according a new survey from M&A data firm Datasite.
Datasite analysts said they had seen already seen an uptick in certain deals despite the uncertainty.
“M&A is still taking place – despite geopolitical uncertainties and overall market volatility” said Merlin Piscitelli, Chief Revenue Officer for EMEA at Datasite.
“In fact, new deals in EMEA, especially asset sales, purchases and mergers, on our platform, are up 14% year-over-year through the first five months this year. And because these are deals at their inception, rather than announced, this means there is a robust pipeline of deals in the works.”
Around half of the Dealmakers surveyed by Datasite said they were expecting to see the biggest increase in debt financing for deals, while 43 per cent said they would see an uptick in transformational acquisitions or mergers in the months ahead.
Three quarters are also pricing in at least a 5-7 per cent increase in inflation into their financial valuation models for the rest of the year, Datasite found.
The findings come after rampant inflation sparked a slowdown in transactions this year, after dealmakers globally shrugged off covid concerns last year to set new records for deal value, with $1.1tn worth of deals closed – double 2020’s total of $577bn.
Mid-market deals done by private equity firms in the UK hit record levels in 2021, as firms closed £46.8bn worth of transactions across 803 deals.
Deal volumes plunged this year, however, with 371 completed in the first quarter of this year, compared to 570 in Q4 2021 and 610 in Q1 2021.
A top M&A laweyer told City A.M, this week that increased screening time and due diligence had also played their part in the slowdown.
“There is a recognition that it may take longer either to satisfy their diligence requirements or to come up with that with their financing for transactions,” he said.