UK M&A Activity Q3 2023

UK deal volume and values remain subdued for Q3-23 compared to the same quarter last year Q3-22.

Rickitt Mitchell’s market analysis (powered by Pitchbook) shows deal value dropped to £59.1bn in Q3-23 from £70.7bn in Q3-22, a decline of 16%. Transactions involving Private Equity saw a 23% drop in value to £26.9bn, whereas Corporate M&A slowed significantly more stability, registering a modest 4% drop to £21.6bn from £22.4bn. Earlier stage Venture Capital raises registered their first year-on-year increase in value to £5.5bn (versus Q3-22, £5.2bn). Overall deal volume continued its year-on-year decrease, registering 1,858 in Q3-23 compared to 2,362 in Q3-22, a 21% year-on-year decline. 

UK M&A Activity Q3 2023

Sector Trends 

TMT registered the largest volume decline of 28%, from 533 to 413 deals. However, deal value increased by 80% to £12.3bn from £6.8bn skewed largely by Vista Equity Partner’s £4.9bn investment in payment infrastructure software specialist, Finastra.  

Financial Services and Healthcare sectors continued to demonstrate their resilience during economic uncertainty. Financial Services deal volume was steady, but value increased 56% from £12.1bn to £18.8bn, primarily driven by a surge in PE consolidation of accountancy related practices. Healthcare sector saw deal volume decrease by 19% (235 to 191) but conversely registered an 11% increase in value from £6.5bn to £7.2bn. 

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”.