UK M&A slips in 2017

The UK experienced a downturn in M&A activity in 2017 with the number of completed deals worth more than $100m dropping from 46 in 2016 to 38 in 2017, according to data from consultant Willis Towers Watson. 

“An overpriced market [and] the spectre of uncertainty caused by Brexit,” negatively affected UK deal performance in 2017, said Jana Mercereau, head of corporate mergers and acquisitions for Great Britain at Willis Towers Watson.

“International investors will continue to capitalise on a weakening pound and the abundance of cheap financing available,” she predicted. Likewise, French president Emmanuel Macron’s privatisation drive and China’s loosening of foreign investment restrictions provide further opportunities for dealmakers in 2018.

2016 was a record-breaking year for UK M&A, the value of which reached £187.4bn in terms of inward M&A from foreign companies, largely due to a small number of high-value deals. Considering this background, it is no surprise that M&A figures dropped in 2017. Comparatively speaking, the market has remained strong in the UK.

Willis Towers Watson’s research coincided with a 65% drop in cross-border M&A within the EU in 2017, according to the United Nations Conference on Trade and Development’s Global Investment Trends Monitor. The report also found a 27% fall in FDI flows to developed economies in 2017, mainly due to the drop in FDI to the UK and US. The UK’s sluggish performance can be explained by the absence of the megadeals that led to 2016’s M&A and FDI peak.