UK M&A activity: M&A outlook continues to be positive

Steve Ivermee, UKI Strategy and Transactions Leader at EY, comments on UK M&A activity for April – June 2021, published by the ONS:

“M&A activity continued its recovery in Q2 2021 with the ONS recording £44.3bn worth of deals transacted, as appetite for UK assets remains resilient.

“In total, 381 inward, outward and domestic M&A deals completed during the quarter, with strong interest from private equity across all types of M&A driving the post-pandemic recovery.  

“Inward M&A reached £27.7bn, up 234% against Q1 2021 whilst domestic M&A hit £10.6 bn, up 136% from the first quarter of the year. The figures signal a remarkable recovery from Q2 2020 when total transaction volumes reached just £9.1bn.

“Consolidation has been a continued theme in 2021 particularly within the high tech industrial and infrastructure sectors.

“We have also seen increased overseas interest in key UK sectors which have global reach – particularly telecoms, power, utilities and infrastructure - from both corporate and private equity buyers.  

“The elevated levels of M&A and continuing positive sentiment mark a welcome return to pre-COVID levels, indicating that the deal market is returning to ‘business as usual’.

“An evolving issue is regulatory overview of M&A by the UK, particularly in sensitive industries such as defence and technology. If the UK authorities indicate a continuing policy of being open to inbound investment through M&A, we are likely to see a strong flow of such deals in the near-to-mid-term. However, several deals currently in process will set the bar for policy in the future.

“Looking ahead, we expect strong appetite for dealmaking by UK companies, as many, armed with greater clarity on evolution within their respective industries, continue to engage in deals to reposition themselves for the post-COVID world.”