2021 - A year in UK M&A Review

The annual Experian Market IQ UK & Ireland M&A Report was published this week.  How did 2021 compare to previous years?  What impact did the pandemic have (or is continuing to have) on the value and volume of deals for the year? 

As always, we delve a little deeper and crunch the numbers...

We wanted to avoid a straightforward year-on-year comparison and look for signs of recovery and sustainability in the numbers across all sectors.  To compare 2021 performance versus 2020 could be slightly misleading. Just how many deals that were planned to complete in 2020, were put on hold until 2021?

This is a point highlighted in Experian's own assessment in the 2021 report:

"Mergers and acquisitions surged at the beginning of the year as businesses pushed forward with strategic transactions put on hold when the pandemic hit, and the UK’s first quarter figure sat more than 1,000 transactions above quarterly transaction volume in the middle part of 2020.

This unprecedented level of deal making – by some way the UK’s busiest ever opening to a year - was not sustained, with transaction volume receding to a more moderate level over the rest of the year. Still, the 6,917 deals involving a UK company in 2021 represented a 14.3% upturn on the 6,053 transactions announced the previous year, with close to every region of the country returning double digit year on year growth. With the high number of refinancing and rights issues carried out in immediate response to the pandemic receding as the outlook stabilised, more acquisitive deal types came to the fore."

There was a 27% increase in the number of corporate acquisitions and a 51% upturn in buy-out volume year on year, and high levels of cross border deal making and private equity investment were both prominent features of the UK deal landscape throughout the year."

So it would appear confidence is fairly high across the board as we stride into 2022.  We looked at the last 3 years of volume & value figures and compared '21 with '20, and also '21 with '19 figures as a pre-pandemic comparison.  The results were fairly positive in the latter comparison, especially for the lower-mid market we operate within.  Experian stated that overall year-on-year values only dipped because of an absence of deals at the summit of the market.

"An absence of deals in the £20-£30bn category meant that the total recorded value of UK transactions, at approximately £320bn, fell by 6% year on year."

The above is evident, especially when we look at the Infocomms sector in the table below. The absence of a 'mega deal' accounted for the drop in values between '20 and '21, but comparing the '21 values to pre-pandemic 2019 and they are up 16%. Volumes in the same sector were encouragingly up 9% and 17% respectively.

A similar pattern emerges across the board with only Manufacturing and Health sectors showing single digit decreases in volumes when comparing '21 with '19. That being said, both sectors show increases on the previous year, evidence of an appetite for acquisitions and investment.

So, to conclude, with almost every UK region into double digit year-on-year growth in volume, and promising signs of values increasing in every sector (when comparing '21 with pre-pandemic 2019), the outlook is very positive for all sectors and for company owners looking at exit options in 2022.

We have fantastic connections within the UK M&A community.  We know the companies seeking to acquire or invest, meaning we are able to present a range of attractive options to our clients.

And, because we are sell-side advisors, our clients are assured we always have their best interests in mind.

Reach out to La Salle today and we can have a discreet conversation about the exciting options currently available to you.