CEOs plot acquisition spree as UK recaptures global attention
With AA motoring group, Asda, Morrisons and Stock Spirits taken over by private equity firms such as CVC, the UK market has recaptured the globe’s attention, having seen an unprecedented wave of deals.
Stemming from initial undervaluations due to Covid-19 and Brexit, on average, UK companies were being undervalued by around 30 per cent, according to recent data from Schroders.
This has led led to a rush for takeovers and mergers of these UK firms.
Bankers and professional service and accounting and consultancy firms have rejoiced at the $343.1bn worth of M&As completed since the start of the year. This is double the volume of 2019 and the highest since 2000.
Takeover battles
As the globe responds and the global economy sees signs of recovery, CEOs of global companies gear up to take this trend the UK has seen global.
“2021 is proving to be a record year for M&As and other kinds of deals as a large amount of uncertainty melts that has lingered from Covid and Brexit. It is a perfect storm of returning optimism, loosening restrictions and undervalued firms,” commented Chris Biggs, Partner at Theta Global Advisors, a self-proclaimed accounting and consultancy ‘disruptor’.
The UK market has seen a strong wave, and this trend is looking like it is set to go global as major firms gear up to undertake similar takeovers globally in a similar manner to what UK companies saw this year, Biggs shared with City PM
“For those companies investing now into developing and maintaining strong equity stories, the future seems far more stable,” he continued.
“A strong equity story will allow these companies to continue to ride this wave and make plans for healthy developments as a company, developing financially in a sustainable manner going forward.”
Road to recovery
Biggs stressed that the UK has set up a plan for recovery that is extremely investment-friendly post-Covid.
“Despite the initial impact of Brexit with deals and investments moving abroad, we are seeing the financial services sector adapt, with mid-sized firms offering agile, diverse services to their clients with less risks for conflicts of interest, as we have seen previously, as companies begin processes for a boom in global takeovers.“
As business look to avoid actual or perceived conflicts of interest, Biggs can see a big shift towards smaller firms.
“It is easy to get lost in a sea of big clients if your firm is not a key account, but when working with smaller accountancy practices your needs are prioritised no matter how big you are or how tailored a solution you might need as a CEO or CFO.”
“This has come into increased focus throughout the pandemic and will continue long beyond it,” Biggs concluded.