UK M&A in private sector surges to near pre-recession levels

Private company mergers and acquisitions in the UK has risen by 50 per cent in terms of value, new figures show.

Private company mergers and acquisitions in the UK has risen by 50 per cent in terms of value, new figures show.

Mergers and acquisitions in the private sector has recovered faster than in the listed arena, accountancy group UHY Hacker Young says.

Findings from the professional services firm show that the value of M&A targeting private companies has risen by 50 per cent in one year. In rising by £6.1 billion to £18.2 billion, the figures are now at a level not seen since pre-financial crisis levels, UHY Hacker Young says.

The new figures sits just below the £19.5 billion worth of private company acquisitions that was recorded in the year leading up to the collapse of Lehman Brothers. The numbers also contrast to last year’s figures when UHY Hacker Young found that private company M&A had stalled due to the government’s austerity programme and problems in the Eurozone.

Chris Lowry, corporate finance partner at UHY Hacker Young, comments, ‘Whilst the figures are extremely promising, referring to this as a “boom” could be an exaggeration.

‘In fact, what we are seeing is a return to normal activity, as the value of M&A deals has started to come back up to the level it was at before the financial crisis with many long-delayed potential transactions finally taking place.’

Also contained within the study was the conclusion that a weak British pound has enabled US companies to acquire British firms easier, leading to seven of the 20 largest acquisitions of UK private companies during the past year involving ‘major’ American corporates. The firm also says that, because lack of appetite for UK IPO has left many UK private company shareholders looking for alternative exits, the private sector has recovered stronger.

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UHY Hacker Young points out that while it remains very difficult to gain acquisition finance from the banks, many businesses have turned to acquisitions as a better way to utilise significant cash reserves built up in the last few years which are depreciating in value due to low interest rates.

Chris Lowry adds, ‘The increase in the volume of mergers and acquisitions taking place is not because there is new money being lent. Rather, with interest rates so low, companies are putting the cash on their balance sheets to work by making acquisitions instead.

‘Many companies also feel that they are able to do the kinds of deals that have long been on their wish list at an attractive price, and because they are not funding the transactions through debt, that’s making them even more affordable.’

Hunter Ruthven

Bernard Williamson

Hunter was the Editor for from 2012 to 2014, before moving on to Caspian Media Ltd to be Editor of Real Business.

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