2023/24: Winter update

Mark Naughton reviews the current UK M&A landscape

There’s no denying that, across the board, 2023 was a relatively slow year for M&A activity. This was down to a myriad of much-publicised economic challenges – not least soaring inflation, increased interest rates and geopolitical turbulence – which impacted business confidence.

However, as some of these headwinds began to ease towards the latter part of the year and outlook improved, we saw the market start to recover and deliver a strong finish to Q4. This upwards trend was mirrored in our own activity and has continued into the first quarter of 2024. In the last three months FRP Corporate Finance have closed 27 transactions across M&A and Debt Advisory – one of our highest ever quarterly deal volumes – with a strong pipeline reflective of an increasingly buoyant market.

There are a variety of reasons for this more active start to the new year. As is often the case in January and February, there is a legacy of deals worked on in the closing months of the previous year that then get over the line. There is also the continued pressure on private equity investors in particular to invest the funds they have raised, either through new investments or supporting their portfolio to make acquisitions.

However, with market and business pressures like high inflation and interest rates stabilising, both alternative investor and trade buyer appetite has returned, meaning a good level of interest and competitive tension within both pools of prospective buyers. In addition, this stabilisation has contributed to the gap between buyer and seller valuations closing, making deals a more realistic prospect.