According to the latest release from the Office for National Statistics (ONS), mergers and acquisitions (M&A) activity involving UK companies experienced a decline in the first quarter of 2023. The provisional estimates indicate a decrease in both the number and value of transactions compared to the previous quarter and the same period in the previous year.
In January 2023, there were 141 M&A transactions that resulted in a change of majority share ownership, followed by 100 in February and 115 in March. These figures were lower than the monthly averages seen throughout 2022, which consistently exceeded 150 transactions per month.
The value of inward M&A, where foreign companies acquired UK companies, amounted to £12.7 billion in Q1 2023. Although this represented an increase of £6.9 billion compared to the previous quarter, it was £4.1 billion lower than Q1 2022. Notable among the inward acquisitions was the acquisition of Homeserve Plc by Brookfield Corporation of Canada.
On the other hand, outward M&A activity, involving UK companies acquiring foreign companies, saw a decline in Q1 2023. The total value of outward M&A transactions amounted to £2.9 billion, a decrease of £7.2 billion compared to the previous quarter and £0.2 billion compared to the same period in 2022. An example of an outward M&A deal was the acquisition of Coca-Cola Beverages Vietnam Limited by John Swire & Sons Ltd.
In terms of domestic M&A, where UK companies acquired other UK companies, the total value of transactions in Q1 2023 was £1.8 billion. This marked a decrease of £2.1 billion compared to the previous quarter and £2.6 billion compared to Q1 2022. One notable domestic transaction during this period was the acquisition of Crestchic Plc by Aggreko Limited.
Overall, the ONS report suggests a decline in M&A activity at the beginning of 2023 compared to the previous year. However, it is important to note that these numbers are provisional and subject to potential revisions. The report advises caution when comparing results for January to March 2023, as upward revisions may occur until early 2024.
The decrease in M&A activity in Q1 2023 is attributed to factors such as the ongoing economic uncertainty arising from the Russian invasion of Ukraine and a decline in investment intentions. However, small and medium-sized firms were still able to access credit for working capital or equipment purchase, indicating some level of stability in the market.
The ONS will continue to monitor and report on M&A activity in future releases, with the next update scheduled for 5 September 2023.