M&A activity soars in second quarter as foreign buyers flock to the UK

Merger and acquisition (M&A) activity targeting UK companies grew by 13% in the second quarter, as part of a global uptick in deal activity. The UK retained its position as the go-to destination for M&A in Europe, totalling of 355 deals – far ahead of second-place Germany, on 214 deals, and second only to the United States, which accounted for 1293 deals.

The latest quarterly findings also revealed that the UK continues to be a magnet for foreign investment, with 163 deals (46%) originating from foreign-owned companies, 69 of which were from the USA alone, with a further 63 from Europe. This total was marginally (7%) higher than the first quarter of 2018, which reported 152 deals.

Daniel Domberger, partner at Livingstone, comments on the findings:

“Despite a growing threat of trade wars and other political disruptions, the M&A market remains strong – deal activity has thus far defied the political uncertainty we see at home and abroad. Whilst 2018 has not reached the bumper levels we saw in 2017, UK businesses should take comfort from the fact that we are still very much the go-to destination for international buyers – both in Europe and further afield. It’s particularly encouraging to see a renewal in US interest in the country.

The UK’s business services sector was the most popularly targeted sector by a clear margin, accounting for 140 deals, up 20 from the first quarter. Similarly, the Media & Technology and Consumer sectors saw upticks, the former rising from 77 deals to 90, whilst the latter rose from 46 to 54. By comparison, the Industrial and Pharmaceutical sectors remained largely the same (58 and 13 deals respectively).

In the 30 core sub-sectors identified by Livingstone, the UK’s Consulting & Business-related Services was the best performing with 70 deals, followed by Computer Software (45) and financial services (32). Interestingly, the Leisure subsector rose to 5^th most popular, with 25 deals – over double the number achieved in Q1 (12). Other strong performers included retail and construction.

Globally, the USA dominated the M&A market, generating a huge 1,293 deals in the second quarter. The DACH region accounted for 272 deals, the majority of which (214) were German focused; the Nordics also punched above their weight, amassing 262 deals. Meanwhile India and China collectively accounted for 135 deals (75 and 60 respectively).