M&A: The wave before a crash?

If Donald Trump’s improbable victory and the EU referendum has taught us anything (other than the ineffectiveness of prediction polls) it’s that things are ever changing.

Despite a backdrop of global instability, the number of completed merger and acquisition deals is not indicative of a crashing, or even wavering market.

Albeit, the average time to complete the process of an acquisition or sale being around nine months means that it may be too early to say what, if any, effect Brexit will have. However, the depreciation of sterling has markedly reduced the upfront cost of acquisition creating a window of opportunity for international buyers and with interest rates in the UK remaining favourably low, now is a good time to obtain funding for an acquisition.

According to BDO’s latest report, the second quarter of the year, being the first quarter since the Referendum, saw a record number of 707 M&A deals which has slowed to 578 deals in quarter three. The number of deals, however, is not out of line with recent levels and although prices have declined marginally, valuations remain strong.

The market continues to see more buyers than sellers and there is still a strong appetite for quality businesses and for a good strategic fit, buyers will continue to pay a premium.

If you, or anyone you know, is considering selling their business, now may be a good time to do so. Contact one of our Corporate Finance team to discuss this further.