2023: Summer update

The first half of 2023 was dominated by rising interest rates, inflation and reverberating uncertainty following the UK mini-budget last Autumn.

Coupled with the debt crisis in March, it has been a challenging time for UK M&A, but there are signs that confidence is returning. Early indications that would be expected if the economic landscape was worsening - such as widespread redundancies - have not come to fruition, and dealmakers are upbeat that the outlook is brightening.

We continue to see healthy appetite from investors for quality businesses that are underpinned by robust financial forecasts, and those that have skilled leadership teams at the helm. Mandates that are valued between £50 million and £150 million are also proving popular in the current climate, and we expect this to strengthen in the months ahead.

While deal volumes are down this year when compared to 2022, certain sectors remain resilient to market pressures. Technology accounted for 27% of transactions in the first half of the year, and industrials was another important driver. Interestingly, the healthcare sector – which has historically been a mainstay for UK M&A – has seen deal volumes dip by 32%, though this could be attributed to the rush of healthcare transactions following the pandemic.

In the current market, investors are particularly interested in backing businesses that offer a recurring income model. The accountancy industry is a great example of this, with investors attracted to firms that have customer longevity as a form of protection against economic uncertainty.