Spotlight on: UK & Ireland
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Our latest data on private equity (PE) activity across the UK and Ireland shows that the M&A market remains buoyant despite macroeconomic headwinds. A wave of TMT, industrials & chemicals and consumer transactions helped lift quarterly volumes and keep PE activity apace.
Quarterly deal values for Q1 2022 were the second highest value ever recorded since Q4 2019
In our review of UK and Ireland deal activity in the last quarter of 2021, we predicted that with the pandemic’s end in sight dealmaking in 2022 would continue to be propelled by PE’s abundant dry powder and corporates’ strong balance sheets.
A review of the figures for the first quarter of 2022 certainly confirms this trend with the UK and Ireland reporting 56 deals worth €21.3bn, a deal value which far exceeded other European regions, while the number of deals rose from 42 in Q4 2021. Quarterly deal values for Q1 2022 were also the second highest value ever recorded, marginally behind the record set in Q4 2019.
Sector performance
These figures suggest that the UK and Ireland M&A market remains remarkably resilient, driven by the enduring strength of sectors such as healthcare, technology and business services.
Figures suggest that the UK and Ireland M&A market remains remarkably resilient
Indeed, TMT has long been a favourite among PE players and a reliable generator of deal flow, and this trend continued unabated in Q1 2022 where TMT was the most active sector with 14 deals.
In fact, across Europe its LTM deal multiple climbed for the sixth consecutive quarter, while TMT deal volume rose quarter-on-quarter from 56 to 70, underscoring the enduring attraction of all things digital.
The next most active sector in the UK and Ireland was healthcare which recorded nine deals. Strong fundamentals, robust revenue models and scope for consolidation continue to remain key attractions of the sector. Whilst the third most active sector was industrials & chemicals with eight deals.
In terms of value, business services saw by far the largest quarterly deal value, driven by the €6.2bn acquisition of Element Materials Technology Group - a global leader in testing, inspection, and certification (TIC) services - by Temasek from Bridgepoint.
Outlook
the UK and Ireland saw a record 279 transactions
Last year the UK and Ireland saw a record 279 transactions and it will be interesting to see how closely that figure is met in 2022. Given the challenging macroeconomic environment of rising interest rates and inflation, the long-term impact on dealmaking this year remains to be seen and all eyes will certainly be on M&A performance in Q2 this year.
However, as we have previously said, quality businesses will still be fought over, and anyone looking at multiples will have to examine the underlying business and assess what inflationary pressure may look like and whether rising prices can be passed on.
