A recent Office for National Statistics (ONS) report reveals a fluctuating trend in M&A activity in the UK throughout 2023. The year began with a dip in July and a further decline in August, but September marked a pivotal moment as total numbers stabilised, indicating potential equilibrium. Factors such as strategic adjustments, enhanced regulatory clarity, and external economic influences contributed to this stabilization. Despite the challenges, legal experts anticipate a growing confidence in private equity (PE) deal activity for 2024. Business advisory firm Trachet’s CEO and founder, Claire Trachet, discusses what’s on the horizon for M&As in 2024.
The PE market has displayed resilience amid the overall M&A landscape. While larger buyouts have become less common, PE firms are expected to grow in confidence, with increased volumes in Q4 of 2023, underscored by the ONS report which shows a divergence in the PE market, where high-quality assets face aggressive strategies, while other assets experience extended processes marked by heightened due diligence.
PE firms are also strategically shifting focus to international markets, with outbound M&A increasing. Looking ahead to 2024, there is optimism for a robust PE landscape, with a substantial number of assets prepared for sale in the first half of the year and investment banks reporting record pipelines, signalling a positive outlook for the sector. Estimates put the total amount of this unused capital at a staggering $3.7tn, and Trachet asserts that it is this capital which will help fund the revival of the global M&A market. However, it is vital that founders are honest in terms of the long-term viability of their businesses and start planning for an exit as soon as the end of the runway is in sight. If not, Trachet explains, dealmakers can often capitalise on last-minute desperation leaving startups with a less than favourable deal, compared to if they had acted from a point of strength.

Commenting on this, Trachet said: “In today’s unpredictable economic environment, startups are faced with the undeniable challenge of securing their future amidst a challenging economic environment. To navigate these choppy waters, it’s crucial that they arm themselves with foresight, continually assessing their financial health and the real-time implications of the broader market. News of stabilisation in the private equity market signals a positive outlook for the start of 2024 after what has been a difficult year.

“Despite a shift away from larger buyouts, the PE market demonstrates strength, showcasing a divergence where high-quality assets face aggressive strategies, and others undergo extended processes with heightened due diligence. The increasing focus on international markets and a positive outlook for 2024, as indicated by record pipelines and a substantial number of assets prepared for sale, underlines the industry’s resilience.”

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