UK finance advisor Oghma Partners has revealed that merger and acquisition (M&A) deal volume was up 32.4% compared to the same period last year.
Oghma Partners said that the estimated deal value had risen to approximately £6 billion, which it said was driven by the emergence of some larger deals like Newlat and Princes. Oghma said that without those deals, estimated deal value was around £580 million more in line with previous T2 periods.
The company also highlighted that 61.2% of deals were valued at £10 million or less, with few middle to higher market transactions. It said that only 14.3% of deals exceeded £50 million, and half of those were above £100 million.
Oghma said UK corporate buyers dominated, accounting for 57.1% of deal volumes, slightly higher than in T2 2023 (54.1%). Financial and overseas buyers reportedly contributed 22.4% and 20.4% of total deal volume, respectively.
According to Oghma’s research, the grocery and confectionary category was the most active, representing 24.5% of total volume, with the bakery sub-category showing “particularly strong activity”.
The ‘Other’ category accounted for 22.4% of transactions, up from 4.7% in T1 2024. Nearly all deals in this category involved acquisitions of pet food manufacturers. A notable deal in this sub-sector included the acquisition of Butchers Pet Care by Inspired Pet Nutrition.
“We expect deal volume to continue at these levels supported by improving economic conditions.”
Mark Lynch, partner at Oghma Partners, said: “Looking ahead, the short to medium term outlook is largely positive. We expect deal volume to continue at these levels supported by improving economic conditions. The potential for further rate cuts by the BoE this winter should provide buyers, particularly financial buyers, with more opportunities to pursue M&A activity.
“We are also likely to see a flurry of short term deal activity ahead of the Government’s budget announcement at the end of October, as business owners are concerned about a potential increase in capital gains tax.
“What remains unclear is whether any increase will take effect immediately or in the new tax year, April 2025. If it’s the latter, we could see a rush to market over the coming months as business owners seek to accelerate their exit plans to benefit from current rates. However, in the longer term, deal activity could decline due to less favourable selling conditions and the higher premiums required to close deals under the increased tax rates.”
