UK M&As hit rock bottom

by Cameron Roberts

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16 Dec 2013

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UK MERGERS and acquisitions (M&A) have reached their lowest point in eight years, after falling for the second year running.

M&A activity in the UK declined by nearly 20% against 2012, with the value of the 1,898 deals declared this year falling 38%, to $80bn (£49.1bn) from $129bn in 2012.

Volumes also fell globally by 6.2% against 2012, with the 37,257 deals announced amounting to $2.3trn, a 6.3% decline in value against last year.

"M&A activity both globally and in the UK has remained bleak. Deal inertia has continued in 2013 as many companies opted to spectate rather than participate in the M&A market," said Jon Hughes, EY's transaction advisory services leader for UK & Ireland.

Though deal values fell globally, France's rose by 40% to $41.4bn, with Germany's also rising 36% to $83.1bn.

The global fall in M&A value was lessened by a stellar performance in the US, which saw deal value involving US asset acquisitions up 27% on last year, the US also contributed 52% value and 28% volume of all global deals.

Jon Hughes said: "Any return to growth for M&A in 2014 will be led by the mature economies as the majority of investment capital is being allocated to developed markets and the volume and value of deals in those markets will have a significant impact on the global deal economy."

Sectors were also hit by the drop in deal volumes. The worst falls were seen in metals and mining (down 27%), and oil & gas (down 21%). Metals and mining also saw a 51% drop in value.

Though M&A suffered another recession year, Hughes warned against complacency: "If the current improvement in economic indicators continues, the first half of 2014 offers the last opportunity to make pre-emptive moves to get ahead of the competition."

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