As strange as it might seem, M&A in the UK is experiencing strong growth. The second quarter of 2011 showed a rise of 19 per cent on the first quarter.
As strange as it might seem, M&A in the UK is experiencing strong growth. The second quarter of 2011 showed a rise of 19 per cent on the first quarter – a figure which represented a 28 per cent improvement on the volume of deals completed in the second quarter of 2010.
Research published by M&A data room provider IntraLinks shows that cash-rich companies and the uncertain economic climate are the key drivers behind deal acceleration.
Matt Porzio, vice president of product marketing at IntraLinks, says that M&A growth is counter-intuitive to what has been seen in the wider economy, but believes that this could be one of the drivers behind the developments.
‘The economic uncertainty has brought the valuation gap between buyers and sellers together,’ he explains.
Additionally, he adds that the fragility means that buyers don’t want to have their hands tied if conditions do get worse while also not wanting to miss out on promising opportunities if the market experiences an upsurge.
The EMEA region saw slightly lower growth, when compared with 2010, a trend that Porzio says demonstrates the strength of the UK performance.
He adds, ‘28 per cent year-over-year growth is very good when compared with the likes of Germany and the Netherlands – comparatively the UK is outperforming those.’
It’s a combination of good brands and good names being brought to market, he explains, with lots of appetite in the market for attractive targets.
The re-emergence of private equity is another contributor that Porzio sees as having a positive effect on the figures, coupled with the cash-rich situation that many corporate buyers seem to be in.
The biggest growth was seen in Latin America, where growth of 88 per cent was recorded in the second quarter of 2011 over the same period in 2010.
Looking at Latin America, Porzio adds, ‘Brazil is the largest contributor there – it’s a hot region right now, being driven by a global interest in its natural resource and mining options.’
Porzio also points to Chile and Mexico as other strong performers, with Mexico in particular surprising many.
The Asia-Pacific region saw growth of 18 per cent compared with the first quarter of 2011, while North America posted the lowest rise of 16 per cent over the same period, with deal activity in the two regions driven by a ‘significant’ increase in consumer products.
‘You have to be in it to win it. I think people are going to continue to bring deals to the market unless there is a massive global change like a double-dip recession,’ Porzio concludes.