Figures obtained using Experian MarketIQ for all corporate finance transactions involving a UK company show a drop of only 4% in the number of deals in Q1 2021 when compared to Q1 2020. When this is taken down to purely acquisitions involving UK companies deal volumes have actually increased by 3%.
In addition both these categories have been in an upward trend since the first pandemic with transactions in Q1 2021 up 5% compared to Q4 2020 and when solely looking at acquisitions there is an 11% increase in deal volume.
It must be said that that there are number of factors that explain the continued strength of deal volumes, some of the more obvious include the anticipated change in Capital Gains Tax and Entrepreneurs relief that led to a number of deals rushing to be completed before the budget. However, there are also other reasons such as the continued levels of funding available from the likes of private equity and other ‘financial buyers’.
The question that must be asked is will the current levels of deal volumes continue now the budget has passed and as we start to emerge from lockdown. It is also interesting to consider if deal volumes will remain strong but values may decrease or if the types of transaction will begin to involve more distressed M&A as Governmental props are removed and businesses have to stand on their own two feet once more.