UK M&A volumes down but appetite to invest up, says RSM UK

M&A in the UK in Q1 2023 was down on the previous quarter, according to the latest figures from the ONS, but RSM UK says the appetite to invest is improving, largely due to economic recovery – albeit slow – and early signs of ‘realignment of expectations’ from sellers.

The total combined number of monthly cross-border and domestic M&A involving a change in majority share ownership averaged at 119 transactions during the three months of Q1; these compare with over 150 in each month throughout 2022. The value of inward M&A (foreign companies acquiring UK companies) in Q1 2023 was £12.7 billion, £6.9 billion higher than the previous quarter, but £4.1 billion lower than Q1 2022. The total value of outward M&A (UK companies acquiring foreign companies) in Q1 2023 was £2.9 billion, £7.2 billion lower than in Q4 2022 and £0.2 billion lower than Q1 2022.

James Wild, partner and head of M&A at RSM UK, said: ‘Last year's mini-Budget undoubtedly impacted on deal activity at the end of 2022, and into the first half of 2023. The lack of access to bank debt to fund transactions continues to present challenges. We expect an increase in transaction levels by Q3/Q4 of this year, and a return to pre-Covid levels by Q2 2024.

‘Appetite to invest has not gone away. Indeed, it could be on the up. PE investors still have significant capital to deploy and are ideally not slowing the cadence of their investment activity, especially when the right assets present themselves."