South East deal activity falls by 15 per cent in Q3

South East deal activity was down 15 per cent year-on-year as macro-economic forces dampened the market tinder for dealmakers.

The United Kingdom and Republic of Ireland M&A Review by Experian for Quarter Three showed the volume of deals in the region fell from 951 for the same period in 2021 to 811 for this year.

The value of total deals, however, increased year-on-year with transactions totalling 30,336m this year compared to 27,526 last year - an increase of ten per cent.

Deals in Q3 alone accounted for close to 54% of the region’s deal value, a high not seen since Q2 2018, which reported close to £20bn for the quarter.

The opening statement of the Experian report read: "Ukraine, the cost of living crisis, rising interest rates, energy concerns and political turmoil. The almost unprecedented convergence of issues navigated by UK companies in 2022 means that many firms have decided to reassess their plans for M&A this year – at least in the short term – and activity in the third quarter was particularly muted."

Tech and manufacturing were the most targeted sectors in the South East, with the USA and Canada leading the way as the most high-volume buyers.

Overseas companies collectively spent £10.6bn on the region's assets in Q3, whilst corporates spent a total of £563.9m on overseas operations, with European assets accounting for more than 50%.

Outside of London, the South East is the largest contributor to UK M&A activity, accounting for approximately 17% of deal volume and value.

Deals

The £5.1bn takeover of Newbury-based Micro Focus International by Open Text Corp of Canada was the fourth largest deal in the UK and cements Open Text’s position as one of the largest software and cloud businesses in the global market.

In September, Kent-based Vistry Group tabled a £1.3bn cash and shares deal for smaller rival Countryside Properties. The Countryside brand will sit alongside Vistry’s well-established Bovis Homes and Linden Homes brands.

Buckinghamshire-based Biffa, accepted a lowered £1.3bn cash offer from Energy Capital Partners, as turmoil in the markets saw ECP offer 410p per share, down from the offer of 445p per share tabled in June.

A £2bn deal announced in August, in which French company Veolia agreed to sell its UK waste activities to Macquarie, is widely mooted to be withdrawn, as the CMA is now expected to approve the sale of Suez UK to Suez SA, ending a two-year ownership battle.

Approximately 20% of the region’s deals were private equity funded, with investment coming from a wide range of private equity and venture capital firms, supporting businesses at all stages of growth.

Specialist lenders SME Capital and Triple Point topped the table as most active lenders to South East businesses.