2023: Spring update

From heightened political uncertainty to rising inflation and interest rates – the pressures of the current climate have presented considerable challenges to the UK M&A market. A recent report by Refinitiv* highlighted that UK M&A activity was down 60% by value in the first quarter of this year – with deal activity levels at the lowest Q1 total since 2013, and the lowest of any quarter since 2016.  Part of this decline can be attributed to the knock-on effect of the uncertainty caused for the M&A market immediately following the UK mini-budget in September 2022.

But whilst current market conditions appear to have impacted larger deals in the upper-mid market and beyond, our experience at FRP Corporate Finance is that M&A levels in the lower-mid market, in which we operate, appear more robust. In Q1 our team closed seventeen transactions, acting as sell side, buy side or debt adviser.

With 50 per cent of our deals in Q1 involving private equity firms – a similar level to 2022 – we are continuing to see steady levels of activity in this area. We expect a continued flight to quality within private equity, with firms being more discerning about where they deploy capital, and more focus on high-quality platform companies and buy and build strategies around existing investments.

We have seen a good mix of deals across sectors in Q1, with a significant number of completions in the UK manufacturing sector and a notable interest in professional services, particularly buy and build opportunities from private equity. In the wider market, technology transactions were unsurprisingly impacted in Q1 from any instability caused as a result of the closure of Silicon Valley Bank; however, we have still closed transactions in this sector and anticipate increasing levels of activity as funding confidence returns.

We move into the summer months with a healthy pipeline of deals, and a feeling of great pride in our team, following our recent award win at the Private Equity awards.