Predicted Office of National Statistics’s inflationary figures set to disrupt UK’s M&A market
The UK’s IPO and M&A landscape faced substantial challenges in 2023, dealing with historically high inflation and interest rates, as well as experiencing setbacks like the collapse of headline-grabbing deals such as Adobe-Figma. These factors dealt significant blows to the sector’s optimism, resulting in a 33% drop in the total value of deals involving UK-based businesses. Despite this and continued concerns about the ever-changing level of UK inflation, with the ONS set to announce December’s inflationary figures tomorrow, experts from across the industry are forecasting 2024 to be a bounce-back year for the UK’s M&A market, spurred on by a predicted cut to interest rates following consecutive record-breaking drops to the UK’s inflation rate. Claire Trachet, CEO/Founder of the leading business advisory, Trachet, discusses how businesses can prepare for a successful M&A in 2024, asserting that the mid-sized merger will form the backbone of the UK’s dealmaking recovery.
Against the backdrop of the Bank of England’s decision to hold interest rates for the third consecutive time in December, the number of deals involving UK companies hit their highest quarterly total since mid-2022 in the final three months of the year. Furthermore, the number of private equity firms buying UK-based businesses increased to 915, the highest number of buy-ups since records began in 1980. With a majority of the country’s top economists predicting at least two cuts to the base rate of interest by the end of the year, market analysts are forecasting a resurgence of M&A activity as the cost of borrowing falls, with chief executives having an easier time justifying dealmaking costs to their shareholders.
According to Claire Trachet, founders should take this opportunity to get their shopfront ready for investors eager to launch deals with UK-based companies. With over half a million startups launched in the first half of 2023, founders must seek essential advice on making their business stand out to investors, generating anticipation for potential business-defining deals. Founders must also be prepared for the personal toll of an M&A deal, with the average merger or acquisition taking six months to a year to complete, it’s commonplace for executives to experience severe burnout. Trachet asserts that reconciling advice on both the business and the personal level is essential in founders across the UK securing the best deal for their business.
Claire Trachet, CEO/Founder of Trachet, comments:
“Despite a lacklustre 2023, defined by the shrinking of available capital flows and the collapse of headline deals, including Adobe-Figma. Founders, investors and analysts alike ought to remain optimistic for 2024, the growth of deals involving UK companies hit their highest quarterly total in the final three months of last year, whilst private equity firms filled the gap left by traditional institutional funding due, in part, to an expected cut to the base rate of interest following record breaking inflation figures.
“In anticipation for the year ahead, founders should consider getting their shopfront ready as investors from across the globe look towards undervalued UK-based businesses. With over half a million startups launched in the first half of 2023 alone, it’s become increasingly imperative for founders to determine their priorities and assess the principles of their business.
“Founders must also prepare themselves for the inevitable personal toll of pursuing a worthwhile deal, with the average M&A agreement taking six months to a year to complete, burnout can be commonplace and minor setbacks are often magnified due to overwhelming fatigue. It’s therefore essential for founders to pursue expert advice that merges both the business and the personal.”
