Merger and acquisition deal volumes and values in the UK declined in 2008 by more than those in the US and worldwide, according to research by investment bank RW Baird.
Merger and acquisition deal volumes and values in the UK declined in 2008 by more than those in the US and worldwide, according to research by investment bank RW Baird.
Overall deal value declined by almost 50 per cent last year, around ten per cent higher than the US, Europe and the global figure.
Transaction numbers declined by under a quarter, whereas total value declined by almost half.
The lower end of the market is therefore seeing proportionally more activity. This is especially true in the smaller end of the mid market (<USD100m) where overall deal volume declined significantly less than the other market segments.
The upper mid market and USD1bn+ segments have been hardest hit with both transaction numbers and volumes falling by over 55 per cent.
In Europe, the UK and German M&A markets were the worst hit. The UK posted the biggest decline in term of value of deals completed during 2008, while Germany reported the biggest decline in deal numbers.
The UK became the top target country by number of deals as sterling weakened over the year and the US became the top acquirer by number of deals taking advantage of a strengthening dollar to compensate for tight credit markets.
The most popular target sector in the UK over 2008 was the professional services sector. As firms in this sector were reporting their biggest drop in business in a decade by last summer these may be primarily distressed sales.
In Europe, the UK and Germany saw the greatest decline in deal volume and deal value compared to 2007. In general deal values declined twice as much as volumes, suggesting that conditions remain tolerable for buyers at the lower end of the mid market.
RW Baird says: ‘In conclusion, the UK M&A figures showed some resilience in the lower mid-market where UK activity is traditionally very active, and in deals of undisclosed value. In general, the credit watershed declined from the USD500m mark six months ago to USD100m. Smaller deals obviously have the advantage of smaller credit requirements, a trend that will continue until credit markets begin to show signs of improvement and debt becomes less expensive.’
