A business confidence survey conducted by accountancy firm EY has shown that nearly two thirds of UK companies are planning M&A deals over the next 12 months, which is the highest level since 2010.
The prediction comes after a strong first quarter which saw UK M&A total £87bn, with a total of 681 deals undertaken.
But with the turbulent political landscape due to Brexit, what has sparked such confidence in the UK M&A market?
The EY survey displayed that a high number of respondents were confident in global growth, as 86% of UK respondents expected the global economy to improve. Despite the positive global outlook, only 68% of respondents expected the domestic economy to advance. Nevertheless, trends are still expected to be on the up in general.
There are a number of reasons why this could be the case, one of these being that the M&A market is strong. This, coupled with the fact that the UK is always in an enviable position from an M&A perspective, as it has a tradition of entrepreneurial drive with a history of inbound and outbound M&A activity, places the UK at an advantage in terms of its deal making.
Not just this, but there are also some short-term factors at play within the UK, and globally, which could be sparking the intentions of UK companies. Cheap debt is a positive in driving M&A activity, as well as the amount of dry powder available.
Other recent surveys have also shown a potentially buoyant market as one conducted by PwC showed that over 43% of asset and wealth management CEOs have said that they have M&A intentions. The reasons cited were to enter new markets, increase scale and offer a more diverse product range.
If thinking about selling, the culmination of the aforementioned factors highlight the benefits of doing so now – while the long-term factors supporting UK M&A will most likely always be in place, the short-term (cheap debt and amount of dry powder) will not always be so readily available, so the opportunities should be taken advantage of now.
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