AG's review of UK Takeovers in 2023

Addleshaw Goddard has acted on one third of all firmly announced UK takeovers this year. Deal volumes are broadly the same as 2022 with approximately 50 bids; most of the activity has been in the £100-£500m mid market range. This concentration of deals at the mid-market level has been driven by a combination the accelerative effect of the pandemic generating M&A deals, the availability and price of debt and the current debate about London's status as an international listed market.

Amid all the soul searching about London’s place and future as an international listing venue, public companies continue quietly to leave the market in takeover transactions.

After a subdued H2 2022 which coincided with the Truss/Kwarteng mini-budget and related interest rate spike, private equity has returned to the takeover landscape in 2023, being involved in over 75% of all firmly announced bids. But private equity has not been the only story, as substantial corporates have also sought strategic bolt-ons to their businesses.

AG has acted on one third of all firmly announced takeovers this year. That prompted a closer look: while deal volumes are broadly the same as last year with approximately 50 bids, most of the activity has been in the £100-£500m mid market range of deals.

So we thought we’d try to divine the reasons for that:

Big PE buy outs are out

Small PE buy outs are in

The accelerative effect of the pandemic

London's market illiquidity

The mid-market is where all of these deal drivers coalesce

Sub-£500m companies are more sensitive to the upheaval from the pandemic and other disruptive factors. They are less diversified but more nimble businesses, still on the growth curve but without the market-support to fund the necessary changes. The ‘K’-shaped impact of the pandemic in particular means there are clearly defined winners and losers within this group, both of which are potential takeover targets. The financial climate of dry powder, debt availability and reduced risk appetite means that deal doing in 2023 has been tempered into something more sustainable and deliverable that what we have seen in recent years.

Next steps

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