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Decline in UK deal market


Posted on 17 June 2013

Information services company Experian’s latest review reveals that the 2013 UK deal flow remains in decline.

The latest monthly review shows a total of 314 mergers, acquisitions and equity capital market transactions during April 2013, down by almost a quarter on the 417 deals during the same period in 2012 and indicating a month on month decline of 13%.

Although the overall value of transactions increased from £8bn in March to £8.9bn, the total still amounts to less than the average monthly figure since January 2011.

The number of small deals has decreased by just over 10% and the number of large deals worth more than £100m dropped to 15 – the second lowest figure over the review period.

John Farnsworth, Corporate Finance Partner at Smith Cooper commented on the recent statistics: “ it is important to be cautious when interpreting monthly statistics,  a sharp increase or decrease in deal completions in a particular month is not always indicative of a trend, nor the speed of any such trend. It is also vital to remember the statistics are a general overview and that local, sector and adviser experience could be very different.   For example, closer inspection of the Experian report shows that despite a decline in both small and large deals, the mid-market rose by 12% putting an end to the declining trend since summer 2012.”

John added: “Our own experience is that deal flow is on the increase, and there’s a tangible improvement in the temperament of advisers in the market place. In our case a lot of the increased workflow is in sectors that we selected for their recession resistance some years ago, from all around the UK, from sales to overseas buyers and from the early signs of pickup in the domestic market, including the MBO market.”

John concluded: “We believe there will be more domestic buyers for good businesses in the foreseeable future as confidence levels rise; certainly a lot of UK companies have cash reserves or borrowing capacity to fund acquisitions. Whilst the overall picture may be a little gloomy, we are very positive about the next 12 months.” 

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