Mergers And Acquisitions » PwC reports UK M&A activity falls by almost a fifth in 2023

PwC reports UK M&A activity falls by almost a fifth in 2023

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.

“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,” says Lucy Stapleton, head of deals at PwC UK.

“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.

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 deal making 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.

“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,” says Stapleton.

Industry M&A trends

Industry analysis of UK deal activity shows the Technology, Media and Telecommunications (TMT) sector saw the most activity for 2023 (955 deals), accounting for just over a quarter of total output for the year. Industrial Manufacturing and Automotive followed with 899 deals and also saw the most deal activity for the second half of the year with 390 deals announced.

In terms of value, the Energy, Utilities and Resources  industry saw deals with the highest value in 2023 with a total just over £18bn worth of transactions, however, deal values are down 24% compared to the previous year which saw £24bn worth of deals.

Financial Services followed with just under £18bn (down 51% compared to 2022) and Health Industries with £15bn (up almost 80% compared to 2022).

“We are seeing cautious optimism about the deal environment with dealmakers showing increasing confidence after the recent economic shocks that have affected the M&A market,” says Tim Allen, Deals Industries and International leader at PwC UK.

“Companies’ needing to add new technology capabilities, such as Generative AI, are driving deal volumes in the TMT sector whilst energy transition across the board is supporting activity in the Energy, Utilities and Resources sector. The healthcare industry has also proven resilient.”

Allen notes that with more than half of UK organisations saying they view transactions as the best way to keep up with market changes, PwC expects to see companies making strategic deals to keep their businesses viable.

Private Equity

In the PE space, 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%, up five per cent from 2022 and an increase of almost 14% since 2018.

“With stability returning to the investing environment, significant dry powder and increased pressure from Limited Partners to return capital, many fundamentals point towards more dealmaking in 2024. However, with the higher cost of capital, the ability to generate satisfactory returns will mean deals will have to have a robust view on value creation potential to justify valuations,” says Hugh Lloyd Ellis, Private Equity leader at PwC UK.

Private equity firms invest in companies with the aim of restructuring, growing, and eventually selling them at a profit. They can provide capital to start-ups, support companies through growth phases, or help in the turnaround of companies facing difficulties.

The increasing involvement of PE in deals suggests a robust interest in the UK market for investment opportunities. This could be due to several factors, such as the availability of companies with potential for growth or turnaround, attractive valuations, or a favourable regulatory environment.

The upward trend also implies that despite any economic uncertainties or market volatilities that may have occurred in the period leading up to 2023, PE firms have found the UK deal market to be attractive. This reflects confidence in the UK’s economic fundamentals or in the ability of PE firms to manage and grow their investments in challenging conditions.


PwC’s Global M&A Industry Trends is a semi-annual analysis of global deals activity across six industries — consumer markets (CM), energy, utilities and resources (EU&R), financial services (FS), health industries (HI), industrial manufacturing and automotive (IM&A), and technology, media and telecommunications (TMT). 

Values and volumes referenced in this publication are based on officially announced transactions, excluding rumoured and withdrawn transactions, as provided by the London Stock Exchange Group (LSEG) as of 31 December 2023 and as accessed on 3 January 2024. This has been supplemented by additional information from Preqin, S&P Capital IQ and our independent research. Certain adjustments have been made to the source information to align with PwC’s industry mapping.

UK M&A values were converted to GBP using the GBP/USD 2023 average rate of 1.244



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