Ernst & Young: UK M&A values plummet over 65% in 2012

By Rob Starr, Content Manager, Big4.com

The slowdown in UK M&A continued throughout 2012, with the value of deals falling 66% from the height of the M&A boom in 2007 and 36% in volume1, according to data analysis released by Ernst & Young.

Jon Hughes, head of Ernst & Young’s transaction advisory services practice, said, “Caution and a distinct lack of confidence underpinned M&A sentiment in 2012 and has created a bias towards risk avoidance and inertia.

“But simply sitting on cash in the hope of an upturn is a foolhardy approach. In a weakened market, there is a real opportunity for well positioned players to a steal a march on their competitors and grow inorganically by snapping up choice assets.”

For UK businesses going on the acquisition trail cross border, the number of deals reached 900 and values hit $67.8bn, compared to 1628 deals at $362.5bn in 2007. In 2007, the UK accounted for the most outbound, cross border deals but has since fallen behind the US and Japan.

Commenting, Hughes said, “The Eurozone countries have, up until the crisis, provided happy hunting ground for UK corporates but the volatility and uncertainty has tempered their appetite to invest. This is not to say, however, that there are not good opportunities to be had and the more businesses in the UK stall investment and acquisition plans in the hope of an economic upturn, the more they will lose out to their international competitors who are being bolder and braver.”