Findings from the Office for National Statistics’ (ONS) latest M&A numbers reveal that activity is down by 39 per cent quarter-on-quarter.
However, the value of outward acquisitions (deals abroad by UK companies) has increased significantly compared to the start of the year when 25 transactions worth £800 million were noted. For the second quarter of 2012, 36 deals worth £3.9 billion closed (see table below).
| Acquisitions abroad by UK firms | Acquisitions in UK by foreign firms | Acquisitions in UK by UK firms | ||||
|---|---|---|---|---|---|---|
| Number | Value £bn | Number | Value £bn | Number | Value £bn | |
| 2010 | 199 | 12.4 | 212 | 36.6 | 325 | 12.6 |
| 2011 | 286 | 50.2 | 237 | 33.0 | 373 | 8.1 |
| 2010 Q2 | 49 | 2.3 | 48 | 2.8 | 95 | 2.0 |
| 2010 Q3 | 54 | 5.3 | 59 | 12.4 | 80 | 2.9 |
| 2010 Q4 | 66 | 3.8 | 51 | 7.0 | 83 | 6.3 |
| 2011 Q1 | 70 | 19.8 | 54 | 5.8 | 76 | 1.5 |
| 2011 Q2 | 75 | 11.0 | 68 | 9.7 | 94 | 3.3 |
| 2011 Q3 | 77 | 6.8 | 68 | 5.1 | 97 | 1.5 |
| 2011 Q4 | 64 | 12.6 | 47 | 12.4 | 106 | 1.8 |
| 2012 Q1 | 25 | 0.8 | 48 | 4.3 | 62 | 1.1 |
| 2012 Q2 | 36 | 3.9 | 42 | 2.6 | 71 | 0.9 |
ONS results for domestic M&A in 2011 showed that, month-on-month, deal volumes remained consistent while values fluctuated slightly more.
So far, 2012 has shown a noticeable decline in the amount of acquisitions in the UK by foreign companies and buys in the UK by other UK firms.
However, Andrew Kerr, corporate partner at law firm Pincent Masons, believes that activity is likely to pick up, particularly on an international basis.
Kerr adds, ‘Companies with strong balance sheets and cash resources are continuing to make strategic acquisitions, and many of these are in overseas markets where there is greater perceived values.
‘We have seen an increase in activity in certain sectors, for example, financial services and technology over the last few months.’
Kerr says that Japanese buyers are increasingly looking at opportunities in Europe as a result of a strong Yen.
Speaking to GrowthBusiness, Peter Watson, director of corporate finance at Prism Corporate Broking, says that it is no real surprise that activity levels remain depressed overall given the continued economic uncertainty but is reassured by the improvement over the first quarter of 2012.
He adds, ‘We expect this slow recovery to continue – certainly there are positive signs that MBO’s are now back on the banks’ agenda.’
