M&A Market Records Uptick

The M&A market in the United Kingdom and Ireland has seen modest growth over the past six months. In the first half of 2024, the number of sell-side transactions significantly increased by 9%, and the average transaction value of an SME rose to 5.2 times the EBITDA. These are the most important findings of the UK&I M&A monitor, the periodic survey from Dealsuite that looks into M&A market trends. Based on the input of 428 M&A advisory firms active in the mid-market (£1-200mn). 

Market Confidence

The announced rate cuts by the ECB and BoE are expected to provide a positive boost to the market.  Economic forecasts for 2024 were already positive, and market confidence appears to be returning. The number of buy-side transactions increased by 1% compared to H2-2023, while the number of sell-transactions rose by 9%. Over half of the closed transactions had a deal size above 5 million (51%), compared to 38% in H2-2023. The average transaction value has slightly increased over the past six months: on average, 5.2 times the EBITDA was paid for an SME.

Companies Are Offered for Sale Earlier Than 10 Years Ago

The business landscape in the United Kingdom and Ireland has undergone significant changes over the past decade, with shifts in start-ups, closures, mergers, and acquisitions. In the 1990s, entrepreneurs typically remained with their companies for around 30 years. Nowadays, businesses are typically brought to market between their 10th and 20th year of existence. 26% of the advisors surveyed report that businesses are coming to market sooner than they did a decade ago.

Floyd Plettenberg, CEO of Dealsuite, confirms that these figures reflect a trend, "The new generation of entrepreneurs no longer feels compelled to persevere with the aim of eventually passing the business on to their children. If they can secure a good sale after a few years, they choose that route as a mark of success. Additionally, businesses now often require a different style of management sooner. The seller typically moves on to start something new, invests, or offers their services as a freelancer."

Outlook

Alongside the uptick in the M&A market, advisory firms are also seeing a robust pipeline, with a generally positive outlook for the second half of 2024. Half of the firms have reported a portfolio growth of at least 10%, and the majority of surveyed advisors (89%) are optimistic about the prospects for the next six months.