Many of us have been looking forward to the moment when the UK economy starts to display some post-lockdown vital signs – even perhaps beginning to return to something like pre-pandemic levels.
Well, as late spring does its business and the sun beats down on us all, the first green shoots of that recovery seem to have emerged. The news coming through is that, for March 2021, the total number of mergers and acquisitions (M&A) involving UK-based companies hit its highest level since before the pandemic.
To provide a bit of context, the total number of completed monthly mergers and acquisitions (and we’re talking both domestic and cross-border here) clocked in at 196 back in March 2020, in those halcyon days when life in Britain was still largely unaffected by the pandemic.
But then, as you’ll recall only too clearly, Prime Minister Boris Johnson initiated the first national lockdown from March 26. And, like so many other sectors of life, UK business took a sudden and crippling hit.
Mergers and acquisitions for April fell drastically to 107, falling again to a low of 58 for May 2020 before climbing back to 110 for June.
After that May low, in fact, M&A activity began a steady recovery, with 145 deals in December 2020 and 153 total monthly deals in March 2021 – the highest since that pre-COVID, March 2021 level.
But, as the Office for National Statistics (ONS) took care to warn us, that monthly deals tally is still below pre-pandemic levels. The likely cause of this is that businesses are looking to inward investment, rather than a series of takeovers.
It’s also interesting to look at the actual sums of money involved. In the first three months of 2021, overseas companies laid out £6.1 billion to acquire British firms, while in the opposite direction – UK companies acquiring foreign outfits – the outlay was £2.5 billion.
That healthy £6.1 billion figure was boosted by the likes of US video game company Electronic Arts buying UK developer Codemasters in February for 1.2 billion dollars (£850 million).
When it comes to domestic acquisitions, meanwhile, British firms buying domestic rivals were valued at £3.8 billion during the January-March quarter – quite a drop from the £9.1 billion registered for domestic acquisitions in the last quarter of 2020.
Major domestic mergers during 2021 Q1 included publisher Future buying the owner of price comparison website Go Compare for £594 million, while charitable foundation The Wellcome Trust acquired developer Urban & Civil for £506 million.
The ONS added some further detail to the landscape, by way of the Bank of England’s quarterly business conditions report, which takes the pulse at some 700 UK businesses every three months. The report for 2021 Q1 found that companies’ investment intentions had picked up somewhat – and that ‘fewer contacts said that they were cancelling or postponing investment and more said they were reinstating investment to increase efficiency and capacity’.
It’s good to see some signs of recovery in the UK economy, and here at Jefferson Talent Group we hope that the next 12 months bring continued vital signs across the business landscape.
Whatever the road ahead for you and your team, our business transformation consultancy can help you plan with confidence – and make sure that you are one of the year’s very best news stories. Contact us today to find out how we can help you plot your route ahead.