Domestic and inward M&A activity both fall in Q1

The number of domestic mergers and acquisitions of UK companies by other UK companies fell by almost 50 per cent in the first quarter of 2017 against the last quarter of 2016 according to new figures published today by the Office of National Statistics.

There were 48 successful acquisitions of UK companies by other UK companies in the three months to the end of March, a 47 per cent fall against the previous quarter and a 48 per cent fall against the same period in 2016. However, the value of successful domestic M&A rose to £3.6bn during the period, compared to £2.5bn in the previous quarter.

Inward M&A activity also saw a notable fall in both value and number compared with the high levels seen during the four quarters of 2016. There were 40 completed inward mergers and acquisitions of UK companies during Q1, 36 fewer than in Q4 2016 and 18 fewer than Q1 2016.

The value of inward M&A in the first quarter totalled £5.1bn, which was also a significant decrease on the previous quarter although this can largely be explained by some high value M&A deals which completed in the previous quarter, notably the takeover of SABMiller PLC by Anheuser-Busch InBev of Belgium in a deal worth £83.3bn.

Commenting on the new figures, Rob Donaldson, head of corporate finance at RSM said:

'We’ve seen a slowdown in domestic M&A activity in the first quarter of the year which may reflect a sense of unease about the future of the UK economy and the uncertainty resulting from Brexit. Despite the fall in the pound which has led to some high profile attempts by foreign companies to snap up UK firms, domestic and overseas buyers are proceeding with caution. These conditions are mirrored by slowing activity in the real economy and in the important housing market. Uncertainty is likely to continue at least until we start to see an outline of the UK’s likely future trading relationships with the EU although a decisive outcome in the election may help.’