9 out of 10 UK corporates see a positive outlook for M&A in 2024

A recent survey by investment bank Deutsche Numis revealed that 88% of UK corporates see a positive outlook for M&A this year, with takeover deals predicted to pick up – particularly in the financial and real estate sectors.

Noting a “promising increase” in UK M&A activity in the last few months of 2023, confidence has grown amidst a continued slowdown in inflation and a subsequently likely drop in interest rates later in the year.

In Deutsche Numis’s annual survey of FTSE bosses, 89% believe UK public listed companies are vulnerable to takeovers, with 61% saying that international corporate buyers would be at the forefront of the buying spree.

“In 2023, acquisitions of such targets were constrained by a significant valuation gap between buyers and sellers, but we have seen recent indications of a reduction in this bid-offer spread,” said Oliver Ives, co-head of UK M&A Deutsche Numis.

According to Claire Trachet, CEO/Founder of Trachet, these forecasts should inspire confidence among the hundreds of founders across the UK looking for an exit in 2024.

“Despite a lacklustre 2023, defined by the shrinking of available capital flows and the collapse of headline deals, including Adobe-Figma, founders, investors and analysts alike ought to remain optimistic for 2024,” she said.

“The growth of deals involving UK companies hit their highest quarterly total in the final three months of last year, whilst private equity firms filled the gap left by traditional institutional funding. This was due, in part, to an expected cut to the base rate of interest following record breaking inflation figures.”

Reflecting on 2023

2023 proved to be a difficult year for the UK’s deal-making ecosystem, tough financing conditions and deteriorating business confidence undermined the prospect for a continuation of the M&A boom witnessed in the post-pandemic landscape of 2021, a year when the total value of deals involving UK companies soared to $658 billion.

According to last month’s report from the London Stock Exchange Group’s Deals Intelligence Team the total value of mergers and acquisitions involving UK firms fell by 33% to just $265 billion throughout 2023.

“In anticipation for the year ahead, founders should consider getting their shopfront ready as investors from across the globe look towards undervalued UK-based businesses,” says Trachet.

“With over half a million start-ups launched in the first half of 2023 alone, it’s become increasingly imperative for founders to determine their priorities and assess the principles of their business.

In the latter quarter of the year, however, the number of deals involving UK companies hit their highest quarterly total since mid-2022, whilst the number of private equity firms buying UK businesses increased to 915, the highest number of buy-ups since records began in 1980.

Following a survey of 200 FTSE 360 board directors and 200 institutional investors conducted in 2023, it was found that the financial sector was seen as the most attractive vertical for M&A – followed by real estate.

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