Wed, 07 Feb 2024 | BUSINESS NEWS
UK M&A activity falls by almost a fifth in 2023, but cautious optimism grows as economic conditions stabilise.
• UK deal activity shows the Technology, Media and Telecommunications (TMT) sector saw the most activity for 2023
• Energy, Utilities and Resources saw the highest deal value
• PwC analysis shows that while the majority of UK deals in 2023 were led by corporates, the number of deals involving private equity reached its highest level at 42%
UK M&A activity in 2023 fell below the levels seen the previous year as economic headwinds continued to affect the number of deals completed in the year, according to PwC’s latest Global M&A Trends 2024 Outlook. However, activity for 2023 is still at pre-pandemic levels and as economic conditions ease, confidence is expected to return to the market.
In total, the UK saw 3,628 deals across 2023, compared to 4,362 the previous year, a 17% decline, almost triple the rate of decline in global deals volumes of 6% over the same period. Further analysis shows a drop in deal volume during the second half of 2023 (H2 2023) of almost 600 deals compared to the first half of the year (H1 2023). The volume of activity seen in H2 2023 is the second lowest in the last five years, next to the first half of 2020 which was affected by a slump in dealmaking early in the pandemic.
There was a total of £46bn worth of UK deals in H2 2023 compared to £42bn in H1, bringing the total deal value for the year to £88bn. However, total deal value in 2023 was down 41% compared to almost £150bn worth of deals seen in 2022.
Lucy Stapleton, head of deals at PwC UK, said:
“While the macroeconomic environment is still challenging, overall, we are in a much better place than we were a year ago with inflation steadily falling and while interest rates are still higher than recent times, they have stabilised.
“There is still an appetite for deals - our recent CEO Survey shows more than half of UK CEOs expect to make at least one major acquisition in the next three years and that the UK is the top investment target for US CEOs, while also becoming an increasingly popular place to invest for Chinese businesses.
“We expect the most robust areas of the market, underpinned by societal megatrends, will continue to drive deal activity such as healthcare whilst the fast pace of developments in AI and net zero will be key drivers for dealmakers.”
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