Large M&A picks up in 2024

Large M&A picks up in 2024 – what does this mean for UK SMEs

An article from S&P Global Market Intelligence had some rather better news about MA& activity! January marked the second straight month in which four $10 billion-plus M&A deals were announced. The dearth of large transactions in 2022 and through 2023 was a product of rising interest rates and economic uncertainty. The backdrop for M&A became more conducive to dealmaking in the fourth quarter of 2023 with confidence levels and credit availability starting to improve.

But what does this mean for UK SME’s, especially in an election year.

Well, for one thing there will be a ‘trickle down’ effect as the stagnation period comes to an end – and that will be good for all businesses. M&A activity has its peaks and troughs as do most industries, but there is always a levelling off period. M&A is a key driver of business growth and whilst higher interest rates offer an improved investment channel, acquisitions offer more opportunities and there remains a huge amount of ‘dry powder’ waiting to be deployed.

But the fact is that the SME market, particularly the lower and middle parts, have still seen sustained activity throughout 2022 and 2023, albeit the last few quarters of 2023 saw a drop but nothing near as dramatic a fall as the top and bottom extremes.

In the UK, and in an election year, business owners may well fear a change to tax legislation.

But at the end of every boom there is at least a levelling off period. Our research shows that these are often longer lasting than the highs and lows.

Of course we are all aware the last few years have seen the market hit by the Brexit effect, the war in Ukraine and the surge in inflation. No surprise really that 2023 saw a drop in deal volumes.

But there are signs of hope for a recovery in transaction volumes in 2024.As well as some growth in activity at the top end of the market, a Bloomberg survey noted that 88% of UK corporates have a positive outlook for M&A activity in 2024 and are predicting larger transactions.

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