M&A values skyrocket but leave mid-tier untouched

Mid-tier corporate financiers are unlikely to benefit from the huge increase
in the value of UK merger and acquisition deals, recently revealed by figures
from the Office of National Statistics.

The value of UK M&A deals has rocketed in the last quarter, rising from
£3.5bn in the first quarter of 2005 to £8.9bn for the three months to June,
according to ONS data. The figures were also way ahead of second quarter of
2004, when deal values only reached £5.3bn.

Ian Beswick, a director at Tenon Corporate Finance, said: ‘At our level,
things have not changed. The figures are made up of some pretty chunky deals. We
are not seeing any increase in business.’

The study reveals that for the first time the number of foreign buyers for UK
businesses topped those from the UK going to other countries. The value of
acquisitions in the UK by overseas investors has outstripped buying by UK
companies abroad for the past three quarters.

The figures indicate that foreign acquisitions are becoming less attractive
to UK companies, while the home market is supplying fertile ground for overseas
buyers.

While UK companies completed 48 acquisitions of overseas companies in the
second quarter of 2005, the figures showed that 53 UK businesses were taken over
by foreign buyers.

David Brooks, head of M&A at Grant Thornton, said: ‘Overall, UK M&A
activity has been very resilient during the second quarter of 2005. Despite a
small rise in the number of UK M&A deals, the value has gone through the
roof.’

Much of the huge rise in value can be explained by a number of large deals,
including Aviva’s £1.1bn takeover of the RAC. Notable acquisitions of UK
companies include the sale of the Tussauds Group to Dubai International Capital
and BAE Systems Avionics by Italian technology company Finmeccania SpA.