Private company M&A deals plunge as confidence and bank lending dries up
MERGERS and acquisitions among private companies in the UK plunged 65 per cent over the past year as funding from the banks dried up and firms entrenched themselves for the recession, new research has shown.
M&A activity among unlisted firms fell to £6.8bn in the year to July, down from £19.5bn the previous year, according to accountancy firm UHY Torgersens. The fall is steeper than the equivalent drop in value for the entire UK market including listed companies, which fell 59 per cent over the same period.
Unlisted firms have had to grapple with stretched budgets and increasing uncertainty over the course of the financial crisis, while limited bank lending has also proved a major stumbling block for smaller firms unable to tap the capital markets for funding to replace banking loans.
UHY Torgersens partner Martin Johnson said sentiment has begun to shift, adding: “Cash rich buyers now feel that it is time for bargain hunting.” But he warned that unless banks begin lending more freely, private company deal activity will remain muted for the foreseeable future.