UK M&A Activity Q3 2023

Kaine Smith, Partner 

“Although deal values are lower than 2022 in the lower-mid market space (£20m-£100m Enterprise value) transactions do continue to occur at relatively steady volumes. This is reflective of the dilution of macro-economic factors impacting at this level of dealmaking, where factors such as shareholders desire to exit and strategic impetus for growth via M&A can stimulate transactions regardless of external headwinds. The fact that the majority of deals in the lower mid-market space don’t tend to be heavily leveraged further reduces exposure to macro uncertainty.  

Sectors which benefit from naturally defensible market positions such as financial services and healthcare continue to attract strong demand, with premium pricing attainable.  

TMT however has seen a continued widening between seller and acquirer price expectations, with a wait and a see approach often being adopted by both sides, which has suppressed activity.  

Looking forwards, we anticipate a recovery of deal activity levels driven by both a stabilisation in macro-economic conditions and increase in sellers returning to the market after pausing the exploration of their strategic options in 2023. We do however suspect this may not become fully visible in the data until 2024”.