EY comments on UK M&A activity for April – June 2022 published by the ONS

Anna Faelten, Partner, Corporate Finance, EY UK comments:
“Following the bumper year witnessed in 2021, UK M&A activity in the second quarter of 2022 saw a return to pre-pandemic levels more in line with long-term average.

“There were robust levels of activity throughout April and May, with 261 UK deals transacted before a slowdown in June when just 72 deals completed, as high and persistent inflation, recession fears, supply chain constraints, geopolitical tensions and increasing regulatory scrutiny had an impact on completed transactions. 

“Despite this softening in M&A activity, there is still appetite for dealmaking and many CEOs are pursuing transactions that will help their organisations with future growth although many are waiting for the right moment to seal the deal.

“We continued to see cross-border M&A activity in sectors the UK has strengths in, including utilities, renewables, logistics, pharmaceuticals and life sciences.

“Private equity activity is continuing to drive the deal market as PE companies broaden their dealmaking ambitions and compete with corporates for the same assets. This trend is expected to continue for the rest of the year and into next, particularly when considering the amount of available dry powder, rising distressed assets and possible fall in valuations due to turbulent market conditions.

“Looking ahead, elevated levels of uncertainty mean the outlook looks challenging, however the fundamental M&A drivers remain intact which means we anticipate a steady flow of transactions in the remainder of the year.”