Cross border activity in the UK has grown during the first half of 2011, with a 14 per cent increase in the total M&A values being driven by a rise of 105 per cent in outbound buys.
Cross border activity in the UK has grown during the first half of 2011, with a 14 per cent increase in the total M&A values being driven by a rise of 105 per cent in outbound buys.
Research published by investment bank Baird shows that following on from a growth year in 2010, when values recovered from a 2009 low of $127 billion (£77.8 billion) to $215 billion, the first six months of 2011 has posted figures of $104 billion.
Deal count involving outbound M&A from UK acquirers reached 366 for the year to date, a rise of 25 per cent on the same period in 2010.
While cross border activity has seen an increase during 2011, domestic M&A recorded a drop off with deal count falling from 902 to 791 and value from $37 billion to $27 billion.
Looking at the rest of Europe, Jonathan Harrison, managing director of the European investment banking team at Baird, says that in-bound M&A, involving non-European acquirers, remains robust with the number of deals in the first half of 2011 exceeding that of 2007, the last peak.
Overall the number of transactions increased by 4.2 per cent, with the middle market first-half deal total increasing by 5.4 per cent year-over-year.
He adds that average deal size is back to the same level as 2007 at $186 million.
Harrison comments: ‘In the middle market sponsors still represent about one quarter of deal value, which has been fairly consistent over time.
‘With deal value still lower than cyclical peaks, it shows that sponsors are still struggling to put money to work.’
The research shows that the top three sectors for cross border activity by number of deals are services, healthcare and computer and electronics.
The UK leads the way of European target companies acquired by non-European companies, recording more than double the number achieved by second place Germany.
Harrison concludes: ‘Much of the deal activity that we have seen in the first half of the year has been negotiated deals or limited processes, however we anticipate a few more formal, wider processes will commence post summer.’
Harrison explains that decisions to launch may still depend on prevailing economic and credit mark sentiment which remains ‘somewhat fragile’.
