Private equity and foreign bidders were key forces behind a 66 per cent jump in the value of mergers and acquisitions of UK mid-market companies in 2010.
According to new research from UK chartered accountancy firm Grant Thornton, analysing M&A transactions with a value of up to £500m (€591.5m), 2010 saw over 2,100 deals with a total value of £38.9bn (€46bn), compared to just over 2,000 deals worth £23.5bn (€27.8bn) in 2009.
Despite the increase in total M&A value, the dealflow figures for both years represent the lowest volumes since 1995.
Transactions involving private equity firms made up just 251 of the deals in 2010, but accounted for almost half of the total value, including six of the ten largest deals. The £19.3bn (€22.8bn) total represents a 160 per cent jump in value for private equity activity in the UK mid-market compared to £7.9bn (€9.3bn) in 2009.
The bulk of the remaining cash was spent by foreign bidders, who were behind 717 deals worth £18bn (€21.2bn).
Stephen Baker, corporate finance partner at Grant Thornton, said, “The number of UK M&A deals dropped off in the second half of 2010 as uncertainty gripped the market once again and economic recovery looked likely to be a long slog. Nevertheless valuations rose steeply in 2010 fuelled by private equity and foreign bidders
“The increase in the total deal value of mid-market M&A is sustainable as quality assets continue to fetch premium prices. While domestic deals still make up the largest share of mid-market M&A, the value of foreign bids for UK assets has soared by more than half,” he added.
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