London deals slow to 14-year low amid private equity slump
- M&A deals involving the UK fell 45% from levels seen since last year
- Deal value lowest year-to-date total since 2009, findings show
The value of mergers and acquisitions (M&A) deals made with UK involvement has fallen to a 14-year low in 2023, new findings show.
M&A deals with any UK involvement are worth a total of £144.7 billion so far this year, down 45 per cent on levels seen last year, according to LSEG Deals Intelligence .
The value of deals involving the UK is at the lowest year-to-date total since 2009 amid the turmoil of the global financial crisis.
Languishing: The value of M&A deals made with UK involvement has fallen this year to its lowest level in 14 years
M&A involving a target in the UK has reached around £77bn so far this year, which is just over half the value recorded over the same period in 2022, following a 48% decline. percent in domestic mergers and acquisitions and a 49 percent drop in inbound deals.
The UK is the third most attacked country globally this year, after the US and China, and M&As involving UK targets account for 5 per cent of global M&As announced so far during 2023, according to the findings.
Sixty-five percent of UK target M&As involved a foreign acquirer, with the remaining 35 percent involving domestic buyers.
LSEG Deals Intelligence said the count of “mega deals” is at its lowest level in six years, while the value of private equity-backed deals is at its lowest level in five years, despite a “high count of agreements”.
Lucille Jones, senior manager at LSEG Deals Intelligence, said: “In these uncertain times, with a recession looming, mergers and acquisitions involving UK companies have fallen by 45 per cent to the lowest level in fourteen years.
“We are seeing double-digit percentage declines in both the domestic and cross-border deal categories, and declines have been reported across all sectors.”
He added: “One of the few positives to highlight from our third-quarter data is that, while down 22 percent from last year, the number of deal announcements is historically high, at a level only surpassed three times in the last fifteen years.
“A worrying outlook for the UK economy is dampening deal-making enthusiasm in British boardrooms and we are likely to continue to see a cautious approach to deal-making in the coming months.”
More than four thousand deals have been announced so far this year, 22 percent less than last year, but the fourth highest number of deals in the last fifteen years.
After the value of deals announced during the first quarter of the year fell to the lowest quarterly level since the final quarter of 2009, M&A activity rose 60 percent in the second quarter of 2023 before falling 13 percent. percent in the third quarter, LSEG Bid Intelligence said.
Some analysts were preparing for London-listed companies to be delisted as buyers capitalized on cheap prices, but a wave of acquisitions has not materialized.
However, some extraordinary deals have been achieved in the UK. The £5bn takeover bid for Dechra Pharmaceuticals by Swedish group EQT represents the largest deal involving the UK announced so far.