Economic headwinds saw UK M&A activity in 2023 fell to almost a fifth below levels seen in the previous year, according to PwC’s latest Global M&A Trends 2024 Outlook, a semi-annual analysis of global deals.
PwC’s analysis covers deals in the consumer markets, energy, utilities and resources, financial services, health industries, industrial manufacturing and automotive and technology, media and telecommunications sectors.
In 2023, the UK saw 3,628 deals compared to 4,362 the previous year — a 17% decline which is almost triple the rate of decline in global deals volumes of 6% over the same period.
PwC’s analysis also revealed a drop in deal volume during H2 2023 of almost 600 deals compared to H1 2023. The volume of activity in H2 2023 is the second lowest in the past five years, only trailing H1 2020, which in turn was affected by a slump in dealmaking in the early days of the pandemic.
H2 2023 saw a total of £46bn worth of UK deals compared to £42bn in H1. 2023 overall saw a total deal value of £88bn, which was down 41% compared to almost £150bn worth of deals the previous year.
In a statement, Lucy Stapleton, Head of Deals at PwC UK, said: “While the macroeconomic environment is still challenging, overall, we are in a much better place than we were a year ago with inflation steadily falling and while interest rates are still higher than recent times, they have stabilised.
“There is still an appetite for deals – our recent CEO Survey shows more than half of UK CEOs expect to make at least one major acquisition in the next three years and that the UK is the top investment target for US CEOs, while also becoming an increasingly popular place to invest for Chinese businesses.”
In terms of deal volume, the technology, media and telecommunications sector saw the most activity for 2023 at 955 deals, which accounted for just over a quarter of total output that year. The industrial manufacturing and automotive sector followed with 899 deals, also ringing in the most activity in H2 with 390 deals.
In terms of value, the energy, utilities and resources sector saw deals with the highest value in 2023 with a total of just over £18bn; this was, however, down 24% compared to the previous year, which notched £24bn. The financial services and health industries sectors followed, with just under £18bn (down 51% from 2022) and £15bn (an almost 80% increase from 2022) respectively.
PwC’s analysis also revealed that the number of private equity deals reached its highest level at 42% — a 5% increase from 2022 and a nearly 14% increase from 2018.
