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UK public Mergers and Acquisitions (M&A) have hit levels unseen since 2018.
According to research from Barclays Investment Bank, a series of $5-billion-plus transactions has allowed the UK to leap ahead of the rest of Europe.
Although there remains significant geopolitical uncertainty and a changing macroeconomic backdrop, the boardroom confidence has remained remarkably resilient.
Growth driven by overseas buyers
Foreign interest in high-quality, UK-based companies has surged, with public M&A rising from $38bn to $77bn compared to the previous year.
Strategic acquirers able to take a long-term view can use current market conditions for their benefit, by acquiring businesses whose value may not be reflected in share price.
Shifting tactics
Buyer tactics are changing too. This year has favoured large unsolicited takeover approaches with public pressure campaigns, often referred to as “bear hug” manoeuvres.
Bidders are increasingly willing to make public proposals or return with repeated approaches.
The result of the evolving tactics is a different dynamic for buyers, with more emphasis on getting the approach, valuation and execution strategy right from the start.
Top sectors attracting the most M&A
According to Barclays data, the most attractive sectors for UK public M&A activity are as follows:
- Financial Institutions Group – $31 billion of transactions
- Real Estate – $26 billion of transactions
- Business Services – $19 billion of transactions
- Industrials – $16 billion of transactions
- Media and Telecommunications – $15 billion of transactions
What are the implications of current Mergers and Acquisitions activity?
UK corporates face a more complex operating environment, with rising inbound interest, more competitive processes and a heightened assertiveness from buyers.
To be prepared, it is important to have a view of valuation and strategic alternatives, ready to explore an unsolicited approach under time and market pressures.
The increased competition faced by prospective buyers requires more attention on conviction, financing, tactics and certainty of execution.
Not only is it important to find an attractive acquisition, but buyers must also be positioned to move with conviction.
Speak to a solicitor
Our solicitors can help structure transactions and conduct the legal due diligence needed for M&A in a competitive market.
Business owners should have strategies in place and understand the value of their business, should an approach be made.
We can represent your interests in negotiations and ensure transactions are effectively structured and carried out.
Considering a merger or acquisition? Speak to our solicitors to discuss your options.
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