Private Equity M&A Report 2023

Welcome to the 2023 edition of our annual review examining deal terms and trends in the M&A and private equity markets. For the fifth year running we are delighted to work alongside Pinsent Masons and Howden M&A to pool our deal data, which we believe (as with previous years) provides the most comprehensive analysis of UK mid-market transactions available for review by buyers and sellers alike. We hope it continues to prove insightful in assisting benchmarking on what constitutes ‘market practice’.

In 2022 we reflected on a record year of deal activity as global economies re-opened post pandemic, resulting in a backlog of transactions coming to market with deal activity underpinned by abundant liquidity and high demand for quality assets. At the same time we noted the worrying headwinds on the horizon from the war in Ukraine, and the energy and cost of living crisis. While pandemic fears have receded the conflict in Ukraine continues to have negative global economic implications, though a major European energy crisis appears to have been averted thanks to a mild winter. However with inflation running at double digits, leading to high wage demands and industrial action, and with interest rates increasing the cost of debt and further curtailing consumer spending, the outlook continues to be uncertain.

In the UK we saw solid transactional demand through 2022, albeit with a noticeable slowdown in the second half, not helped by the turbulence of the short lived Liz Truss government. While there remained plenty of sellers and buyers active in the market we found transactions took a lot longer to close than in 2021, which was perhaps reflective of general economic uncertainty and more nuanced discussions on valuations.

In sector terms, Technology, Media and Telecoms again led in the volume of transactions. Even if the shine appears to have recently come off ‘big tech’ valuations there was still a keen market for mid-market and growth technology companies. The Life Sciences and Healthcare sector saw the second highest number of transactions and this reflects both a growing appetite for innovative UK life sciences companies as well as for service providers in the healthcare sector. We also saw a notable increase in the volume of Energy and Infrastructure sector deals perhaps driven by a firm pricing environment.

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