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M&A market update: Deal volumes strong despite fears of tax change

M&A market update: Deal volumes strong despite fears of tax change

Thursday, 01 April 2021

The UK mergers and acquisitions (M&A) market remains strong with a consistently high volume of deals at the start of 2021. Business confidence continues to grow as the UK moves out of lockdown and sellers were given a further boost as the rumoured increases in capital gains tax haven’t materialised… yet!

 

Headlines

A recorded total of 395 UK deals for an estimated total of £48.2 billion were reported in February 2021, as the technology, energy and medical industries threw serious weight into the economy. The stable monthly performance of the mergers and acquisitions market over the last five months has brought back a lot of confidence and, coupled with relatively cheap and accessible capital, a noticeable increase has been felt in both the number of inquisitive acquirers and potential vendors.

For those interested in the top end of mergers and acquisitions, nine events worth over £1 billion were identified, with Jazz Pharmaceuticals and online car retailer, Cazoo, the most notable names to hit the papers.

The Government also completed on the final disposal of Bradford & Bingley Bank and NRAM Ltd for £5bn to Davidson Kempner Capital Management LP and Citibank. At first glance, this deal wouldn’t appear to be of public interest, but when reminded that the sold business was formerly known as Northern Rock (yes, the Northern Rock!), this deal is significant as it marks the end of public ownership in one of the most infamous banks of the 2007-2008 financial crisis.

East Anglia and SMEs

To bring some perspective back to the more realistically sized business, what does the industry data mean for you? My three biggest takeaways are:

  1. The right time to sell? Stable deal volumes have been driven by demand with more and more interested purchasers searching for the right business to buy. Cheap and accessible financing have further boosted demand, and both locally and nationally, it’s starting to feel like a seller’s market!
  2. Technology and Medical are particularly in demand. It’s no surprise that those industries that best survived the pandemic have been the first movers in increased mergers and acquisitions market activity.   
  3. No change to capital gains tax (CGT). Like a lot of professionals, I was anticipating an increase in capital gains tax in the March Budget and was very pleased to see that the Chancellor decided to pin these plans for now. It does, however, very much feel as though we have just ‘kicked the can down the road’ and it may come back to bite in the near future, so I would encourage you to enjoy it while it lasts! 

Need help?

Are you considering your exit options? Are you actively looking for a business to acquire? Or just want to find out more about the M&A market for your industry and area?

Get in touch with your usual contact, or Will Gibbs, Corporate Transactions Executive. Call 0330 024 0888 or email enquiry@larking-gowen.co.uk.

Data and graphs provided by MarktoMarket – find out more here

Will Gibbs

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