First Quarter Mergers and Acquisitions Records Decade High After UK Deal Flurry

The United Kingdom has snapped up its strongest first quarter for mergers and acquisitions (M&A) in ten years after various businesses signed off numerous deals amounting to a total of $120 billion (£85 billion).

according to research by EY, between January and March 2018, a total of 681 deals were secured with automobiles, healthcare, and telecoms, proving to be the hottest sectors for transactions.

The number comfortably surpasses the final three months of the past year when firms were able to seal 586 deals that are worth a total of $51 billion (£36 billion).

However, it still falls short of the $147 billion (£104 billion) and 1,045 transactions that were seen during the first three months of 2007.

The managing partner for UK and Ireland transaction advisory services of EY, Steve Ivermee, stated: “The UK deals market has experienced a very healthy start to the year as UK companies with presence in international markets remain particularly attractive to international investors.

“More significantly, we see UK businesses continuing to make deals internationally. The significant increase in inbound transactions is likely to lead to a new environment for M&A and deal makers.

“Some of these deals are likely to face increased scrutiny by regulators, government and the public about their purpose, which will need to extend beyond cost savings.

“Articulating this narrative in a compelling way to ensure all stakeholders are onside will become increasingly key to help ensure deals are done.”

Notwithstanding the concerns that the uncertainty of Brexit would place M&A on the back burner, GKN and Melrose, UBM and Informa, and GlaxoSmithKline and Novartis all proclaimed tie-ups between the period of January and March this year.

It was considered to be a strong performance for inbound deals which underpinned the first-quarter increase. The research of EY pointed to 177 inbound deals that are worth $67 billion (£48 billion) during the three months to March, an increase from the 133 transactions at $11 billion (£8 billion) during the fourth quarter of the past year.

The United States had the strongest appetite for firms in the United Kingdom over the said period which was followed by France, Switzerland, Japan and the Netherlands.

Ivermee stated: “The trade flow between the UK and the US has always been strong and there is no sign of slowing.

“While early days, shifts in policy, such as the recent US tax reforms, could trigger some near-term large deals, as boardrooms reassess capital allocation between the US and non-US territories.

“Looking ahead we can expect an equally strong second quarter as businesses look to lock in more favourable financing prior to any interest rate increases.”