The number of deals through mergers and acquisitions in the UK plunged in the second quarter of the year as market volatility sparked by war in Ukraine spooked dealmakers.
There were 333 deals completed between April and June this year, a drop of 116 compared to the previous quarter and 167 fewer than the same period last year, figures from the Office for National Statistics showed today.
Deal volume remained steady at 131 in April and 130 in May before nearly halving in June, with just 72 deals closed in the UK.
Analysts said today that deal volume had returned to pre-pandemic levels after a frenzy of M&A last year as markets stabilised in the wake of the pandemic.
“Following the bumper year witnessed in 2021, UK M&A activity in the second quarter of 2022 saw a return to pre-pandemic levels more in line with long-term average,” said Anna Faelten, Partner, Corporate Finance, EY UK.
“There were robust levels of activity throughout April and May, with 261 UK deals transacted before a slowdown in June when just 72 deals completed, as high and persistent inflation, recession fears, supply chain constraints, geopolitical tensions and increasing regulatory scrutiny had an impact on completed transactions.”
Cross border deal levels held up more strongly than domestic M&A, with foreign firms continuing to take advantage of currency fluctuations and depressed markets to swoop on British businesses.
The total value of inward M&A – foreign companies abroad acquiring UK firms – in Quarter 2 2022 was £16.1bn, up £0.5bn on the value of deals seen in the first quarter.
“Foreign businesses are also likely to be capitalising on the recent slump in the pound, particularly against the US dollar as well as this year’s 20 per cent decline in the FTSE 250, making many UK businesses considerably cheaper than they were at the start of the 2022,” said Victoria Scholar, Head of Investment at interactive investor.
The frenzy of raids from foreign firms has caused disquiet in some quarters, as political figures grow wary of the mass sell-off of British assets overseas.
The bargain hunt has continued in the third quarter of this year, with fashion firm Ted Baker, cybersecurity firm Darktrace and software giant Aveva among the latest UK firms to fall into the sights of overseas buyers