Dealmaking among UK firms drops to lowest level in four years, figures show

Provisional figures from the Office for National Statistics (ONS) showed there were 93 completed mergers and acquisitions (M&A) in June this year.

This was the lowest monthly level since May 2020, during the height of the Covid pandemic, when there were just 58 deals struck.

The data tracks the number of M&A worth at least £1 million involving UK businesses, meaning when one company takes control of another company, giving an indication of financial strength and confidence across the market.

The number of deals completed between April and June totalled 385, lower than the 463 completed between January and March.

The ONS also found that the value of dealmaking dropped across all areas over the latest quarter.

Foreign takeovers of British firms fell to £5 billion, from £5.6 billion over the first three months of the year.

A notable deal was the acquisition of logistics firm Wincanton by US rival GXO Logistics, worth about £760 million.

UK companies buying foreign companies also fell to £4.2 billion between April and June, from £4.6 billion the previous quarter.

It includes the completion of warehouse giant Tritax Big Box’s acquisition of Guernsey-based UK Commercial Property REIT for £924 million.

Meanwhile, the value of deals struck between UK businesses also dropped to £2.6 billion from £3.6 billion the previous quarter.

Despite the slowdown in recent months, experts are more optimistic that activity will gain momentum over the second half of 2024 as business conditions continue to recover.

James Wild, partner and head of M&A at RSM UK, said: “While subdued deal activity continued in the second quarter of 2024, we’re increasingly seeing a renewed confidence among businesses and a willingness to invest, driven by stabilising economic conditions and the certainty a new government brings.

“The focus now for business owners is the upcoming autumn Budget and the looming threat of an increase in capital gains tax, as sellers rush to get deals over the line.

“As a result, we expect the real increase in deal activity to be in the second half of the year.

“For those that don’t manage to complete deals ahead of October 31, their decision of whether to sell up or press pause and hold onto their business will weigh heavily on the outcome of the Budget.”

The latest figures do not include the high-profile £3.6 billion deal which will see Czech billionaire Daniel Kretinsky’s EP Group take control of Royal Mail and its parent firm.

The takeover was agreed in May but it still needs regulatory approval and to pass a shareholder vote.