UK M&A professionals are optimistic about deal activity and expect it to increase over the next 12 months. This is despite M&A professionals foreseeing a reduction in multiples, even as inflation increases are priced into models, according to a new survey from Datasite, a leading SaaS-based technology provider for global mergers and acquisitions (M&A) professionals.
“M&A is still taking place – despite geopolitical uncertainties and overall market volatility” said Merlin Piscitelli, Chief Revenue Officer for EMEA at Datasite. “In fact, new deals in EMEA, especially asset sales, purchases and mergers, on our platform, are up 14% year-over-year through the first five months this year. And because these are deals at their inception, rather than announced, this means there is a robust pipeline of deals in the works.”
When it comes to deal types, most UK M&A professionals surveyed expect to see the biggest increase in debt financing (50%) and transformational acquisitions or mergers (43%).
Additionally, most UK dealmakers (75%) are pricing at least a 5-7% increase in inflation, if not higher, into their financial valuation models for the rest of the year.
Datasite’s Piscitelli said, “Corporate and private equity is certainly fueling activity. With a weakening pound, there is still a high level of interest for UK firms from private equity bidders who are looking to put their dry powder to work.
“While the uncertainty posed by current market conditions will influence acquisition offers, acquirers, particularly those looking at European targets, are ramping up due diligence to assess legal and financial risks. Also, with the possibility of M&A professionals adjusting multiples downwards, the net result may be lower valuations overall in the second half of the year.”