M&A Report 2023: United Kingdom

Market overview

Compared to 2021, which had record-breaking levels of M&A activity in the UK, leading to a strong seller’s market and extremely competitive deal processes for resilient assets (and even for less obviously attractive assets), the 2022 UK M&A market experienced a cooling in terms of deal value and volume.

Data from Dealogic shows 2022 inbound UK M&A deal value (based on target nationality) was down 34.7% to $112,216 million from $171,903 million in 2021. Inflation, currency declines, energy prices, the downturn of the high-yield market and geopolitical tensions (including the Ukraine–Russia war) impacted equity markets. Despite the slowdown, the 2022 volume figures demonstrate meaningful market resilience overall because the inbound UK M&A deal value (based on target nationality) increased 18.5% from pre-pandemic levels of $94,706 million in 2019.

2022 was a tale of two halves for M&A activity. There was a continuation of the high-intensity activity trend of 2021 in early 2022, which was driven by renewed optimism underpinned by the success of the vaccine rollout, the low-interest environment, private equity sponsors seeking to deploy ‘dry powder’, and strategic divestment and consolidation across the wider market (particularly within the high-tech industrial and infrastructure sectors). A marked difference was felt in the second half of 2022, however, as the Ukraine–Russia war, inflation, tightening debt markets and political change in the UK weighed on the market.

Take-private transactions (i.e., when a publicly traded company returns to private company status as a result of a sale), a firm feature of 2021 and the first half of 2022 (and, in fact, the past decade), also slowed in the latter part of 2022.