Deal volumes spike after COVID fall

The UK Corporate Transactions market experienced a strong end to 2020 both in terms of deal volumes and values. Undeniably impacted by the COVID-19 pandemic, the market had experienced a slowdown of activity in late spring 2020. However, after months of gradual increase, December saw 434 completed M&A deals – the highest monthly volume in recent years, and well in excess of the 320 completed deals in December 2019.

Headlines

Over £76 billion worth of deals were executed or announced during December 2020. The biggest recorded deal was UK pharmaceutical giant AstraZeneca’s $39 billion acquisition of Alexion Pharmaceuticals. The most talked about deal was video game developer Codemasters' sale to EA Games.

Stepping back from the ‘mega’ deals, there has been growing demand for businesses in the financial services, technology or healthcare industries. Whilst other industries are understandably still quiet (namely retail, hospitality and leisure) deals are to be had across the board and the outlook for potential sellers is positive.

What next?

Despite the continued economic volatility of national lockdowns and restricted business operations, there is significant demand for acquisitions of good quality businesses from trade buyers and private equity. With demand outstripping supply and buyers having access to cheap capital, vendors can still expect favourable deal structures and high multiples through competitive tension. At Larking Gowen, we’re seeing a real increase in deal volumes, with multiple transactions lined up to complete before the upcoming Budget on 3 March.

Rumours of a delay in tax hikes until the autumn continue to grow; perhaps this will open the perfect window of high buyer demand with relatively low tax rates?

It’s rarely the perfect time to sell but it’s looking much more like the right time currently.

If you’re exploring your exit options and would like to understand more about the current market in your industry or location then please get in touch with your usual Larking Gowen contact, or you can contact Will Gibbs, Corporate Finance Executive, by email: will.gibbs@larking-gowen.co.uk

Will Gibbs ACA BFP BSc

Figures and graph provided by MarktoMarket – further details can be found here