“The uptick in activity during H1 is reflective of the greater discount to the true value of UK stocks that continues to make UK plc an attractive acquisition proposition. However, it is interesting to note that last year’s trend towards fewer larger value deals seems to have been reversed, with more lower value deals in the first half of the year. Perhaps execution risk (particularly in the form of geo-political risk) is putting a brake on mega-deals. As a significant proportion of bidders come from North America, we do not see any let up in this while the access to capital in the US markets continues to be relatively strong. But as we have seen before, if the US catches a cold, the rest of the Western world will inevitably follow.”

“We anticipate that significant amounts of public M&A activity will continue into H2. While there will be some deals in excess of £1 billion we expect most activity to be below £1 billion. We expect these activity levels to reflect the significant opportunities that continue to be available in the UK market with share prices remaining depressed. Continuing headwinds will inhibit some activity particularly at higher value levels or where there is a more challenging risk profile. Rising costs for UK businesses as budget changes come into effect and the volatile nature of markets due to Trump tariff policies, as well as other global political and economic trends, will affect the risk appetite of some potential acquirors and attractiveness of some targets. The ongoing challenge for target boards of the differential between market price and fundamental value will remain. There is significant optimism that changes of approach from the CMA both in relation to the availability of behavioural remedies and generally will open up opportunities that have previously been considered closed. This may well lead to an uptick in activity towards the end of H2 as the practical consequences of the CMA’s change of approach become clearer.”

“The FTSE350 and AIM 50 indices index have shown a welcome increase in valuations since the nadir of early April; this has had an impact on price discussions, with shareholder requests for price bumps being ever more prevalent. Yet offeror valuation mechanism of targets hasn’t changed, and this is resulting in the average percentage deal  premia this year being in the mid thirties, rather than the 45-55% spread seen in the last few years.”