There are signs of life in the UK M&A market despite lacklustre figures, according to Deal Drivers UK, a study by accountancy firm PKF.

There are signs of life in the UK M&A market despite lacklustre figures, according to Deal Drivers UK, a study by accountancy firm PKF in association with mergermarket.

The report reveals that 257 UK deals worth £2.1 billion were made in the six months to June 2009, a 66 per cent reduction in terms of deal volumes and a drop in valuations of 61 per cent compared with the same period in 2008.

However, if you subscribe to the “glass half full” school of thought, those figures don’t give the full picture. Hugh Matthew-Jones, head of corporate finance at PKF, commented: ‘It would seem that some green shoots are beginning to emerge.’

The mid-cap space has not been as badly hit by the downturn and accounted for 25 per cent of total transaction valuations in the period – the mid-market’s biggest contribution to overall deal values for three years.

Private equity is also waking up. Although private equity activity fell by 48 per cent compared with the second half of 2008, buy-out volumes increased by 33 per cent in the second quarter of 2009, which is the second largest quarterly rise since the beginning of 2006.

Mathew-Jones said: ‘There is little doubt that the UK M&A market is still struggling and the figures in this report verify this. But there are some more positive signs on the horizon as lenders begin to provide acquisition financing again and the global financial markets slowly begin to stabilise.’