Reasons to be moderately cheerful for M & A activity going forward

In total, the UK saw 1,703 deals in H1 2024, compared to 2,126 over the same period last year, a 20 per cent decrease and almost mirroring the decrease in volume seen at a global level of 25 per cent.

Despite this, UK M & A activity is at roughly the same level as H2 2023 which saw 1,681 deals and is still tracking around the same level seen pre-Covid in 2019.

At RSM UK, our national corporate finance team has completed over 80 transactions in the same period, which compares favourably to last year at a similar level, indicating a slightly better half year for our team than the general market.

Some standout deals during that period included the sale of Riva Foods Ltd, a prominent food manufacturer to an acquisitive food investment group; the sale of Chilli IT, a leading IT specialist and IBM Gold Partner to Celerity, a portfolio company of private equity firm BGF; and advice to New Era Energy, a specialist distributor of liquid fuel and related products, on its equity investment from Hanover Investors Management.

So, whilst the general market experienced subdued deal activity up to the half year point, more recently we have been seeing increasingly renewed confidence among businesses and a willingness to invest, an impetus among overseas buyers eyeing up UK companies and private equity investing in platform transactions – an initial company that paves the way for more acquisitions.

With large pharmaceutical companies and venture capital funds sitting on significant cash we should see a continued improvement in dealmaking activity and value creation in the life sciences industry as we head towards the end of the year and into 2025.

The focus now for business owners is the upcoming Autumn Budget and the looming threat of an increase in capital gains tax, as sellers rush to get deals over the line. As a result, we have experienced a real increase in deal activity in the second half of the year.

For those that don’t manage to complete deals ahead of 30 October, their decision of whether to sell up or press pause and hold onto their business will weigh heavily on the outcome of the Budget.

Key industries such as business services, infrastructure, technology and industrials continue to attract the most interest, but with signs of consumer spending picking up we may start to see more opportunities in this sector going into 2025.

History shows that M & A markets undulate, and pullbacks tend to be reasonably short in duration. As we close the year, therefore, and look towards 2025, M & A volumes reflect the strongest level of activity we’ve experienced since the beginning of the current rate-hiking cycle and as a result, we are cautiously optimistic that we’ll see a rebalancing within this space in the year ahead.