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2017 Ends on a Positive Note for M&A Activity in the UK


This article has been submitted by South Wales based law firm, Greenaway Scott

Despite an uncertain political backdrop in the UK, merger and acquisition (M&A) activity has remained relatively stable over the past 12 months.

According to Experian, the total value of M&A activity across the UK reached £217 billion in 2017, which is an increase of almost 30% on activity recorded for the year before.

This could be as a result of institutional lending playing an increasingly larger part within M&A funding, it is estimated that institutional funding is now utilised in up to 70% of all transactions.

Alternative funding options such as asset-based financing, private equity and crowdfunding have also enhanced available funding in the market, which will provide a further boost to M&A activity.

This increase in alternative funding presents a challenge to traditional lenders, as borrowers, particularly start-up companies, are taking a cautious approach to debt-based lending and instead looking to unconventional means of funding.

Whilst the rise in the value of deals in the UK in 2017 can be partly attributed to an increasingly active private equity market, it has perhaps surprisingly also been strengthened by an increase in cross-border transactions.

The acquisition of UK companies by foreign companies abroad appears to have slowed perhaps in response to the uncertainties around Brexit. However, the cross-border acquisition of foreign companies by UK companies has continued to rise with 33 successful outward M&A transactions being recorded in the UK in 2017 amounting to a total overall value of £51.1 billion.

The third quarter of 2017, in particular saw a considerable increase in the value of cross-border deals involving UK companies with 163 transactions taking place between July and September at a combined value of £84.6 billion, compared to the 241 transactions which took place in quarter being valued at £33.2 billion.

In looking forward to 2018, corporate finance experts have reported that they are anticipating continued cross-border activity in both directions from Europe, the Middle East and Africa-based companies and investors.

For Wales, M&A activity throughout the past 12 months has also been promising with the total value of corporate transactions amounting to more than £560 million last year. This could be attributed to increased cross-border activity and a rise in the overall value of transactions.

With a positive year for deal activity in 2017, the outlook going into the first quarter of 2018 is looking to be optimistic, both in Wales and the wider UK.

The information contained in this article is for information purposes only and is not intended to constitute legal advice. If you require further information our property team would be more than happy to assist you. Please contact us at [email protected] or call us on 029 2009 5500 to speak to one of our team.