Driving the Resurgence of Dealmaking in London: Trends and Analysis
The value of mergers and acquisitions involving UK companies has reached $306.3 billion in 2024, showing a 57% increase compared to the same period last year based on data from Dealogic. This surge in M&As highlights the UK’s role as the most active dealmaking hub in Europe this year, with Germany, France, and Italy trailing behind in total M&A activity at $143.2bn, $142.3bn, and $91bn respectively.
Some notable megadeals in 2024 include International Paper merging with DS Smith for £7.8bn, Swisscom acquiring Vodafone for £6.8bn, and Carlsberg purchasing Britvic for £4.1bn. Other significant deals like the £1.32bn bid by ABC Technologies to acquire TI Fluid Systems, Macquarie’s £701mn bid for Renewi, and the £351mn purchase of Loungers by Fortress Investment Group have also made headlines.
Following a lackluster 2023, the uptick in deal activity is excellent news for London-based advisory firms, such as Robey Warshaw, which reported record revenues and profits for the latest financial year. Their turnover doubled to £86mn, with operating profits exceeding £69.5mn, signaling a recovery in dealmaking activities.
Analysts attribute the increase in UK M&As to the attractive valuations relative to other developed markets like the US. UK equities have consistently underperformed in the past decade, influenced by economic policies, market dynamics, and Brexit-related events. Overseas cash influx has also fueled a significant portion of the M&A deals in the UK, with US bidders accounting for 37% of total deal value in Q3.
Despite Prime Minister Keir Starmer’s efforts to plug a £40bn gap in public finances through substantial tax hikes, investors remain optimistic about the UK market. While businesses have expressed concerns about tax increases affecting headcounts, investors consider the overall stability of the UK market as a key strength that outweighs short-term tax worries.
Private equity firms are also looking positively towards 2025, expecting the resurgence in UK dealmaking to continue. The overall confidence in the market, selective valuations, and cash influx from overseas bidders are positioning the UK as a prime destination for M&A activity, setting the stage for a vibrant dealmaking landscape in the coming year.
