US and UK M&A activity remains strong despite global downturn

• Deloitte analysis confirms US and UK M&A volumes outpace the rest of Europe.
• 771 deals recorded between the US and rest of Europe in 2018, a 20% decrease on 2017’s number.
• Divergence between UK and rest of Europe continues in Q1 2019 with M&A values in Europe plunging to six-year low at $4.9bn (£3.75bn), according to latest data from Refinitiv.

The diverging fortunes of M&A across the US and Europe are revealed in analysis from Deloitte. Last year, M&A deal volumes reduced by 11% in the US, and 6% in the UK, but by 20% in the rest of Europe.

This trend is reflected in transatlantic M&A deal activity, with the UK remaining a strong choice for US acquirers and sellers. There were 510 deals between the US and UK during 2018, in line with previous years. However, the 771 deals between the US and the rest of Europe last year represent a 20% drop on the 974 deals in 2017.

Paul Lupton, Deloitte partner in Advisory Corporate Finance, said: “The data suggests US investors appear to be shrugging off uncertainties around political decisions, still seeing UK businesses as an attractive opportunity. By contrast, the cooling of M&A activity in the rest of Europe has continued into the start of this year.

“The US and UK share a language, culture and legal structures, enabling business models to be shared across these markets. M&A in the UK has also benefitted from cheaper sterling and an active private equity deal market. These conditions should prevail for the rest of the year.

“Technology and Media is fuelling transatlantic M&A – accounting for over one third of acquired businesses. The growth of capital deployed into private equity is increasing the involvement of financial sponsors (private equity investment firms) in M&A – now 29% of buyers, and 9% of sellers, up from 20% and 5% a decade ago. This is also driving an increasing trend of secondary sales, from one financial sponsor to another. Furthermore, the size and maturity of private equity in the US and UK enables firms to specialise in bringing businesses through the respective stages of the growth lifecycle.”

Closer to home, a similar pattern emerges in cross-Channel activity, with UK acquisitions of European businesses down by 30% in 2018, from 509 deals in 2017 to 356 last year. Meanwhile UK businesses continue to be attractive targets for European buyers, with 244 deals in 2018, comparable to the 240 deals in 2017.

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Note to editors

About the survey

Deloitte US-UK and Europe M&A deal monitor
Deloitte’s seventh report analyses deal flows between the US and all of Europe. The report is based on the authors’ analysis of the deals completed between 2006 and 2018, inclusive. The data used is based on Deloitte analysis of deal volumes and values as recorded by Thomson One from Refinitiv.

Where referenced, deal value calculations are based on M&A deals for which value is disclosed. Values were not disclosed for over two thirds of the analysed deals, with significant volatility driven primarily by individual high value deals.

Thus it is the authors’ view that deal volumes provide the more reliable indicator of overall trends in the M&A market, and this forms the basis of Deloitte’s analysis here.

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