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Insights

M&A – Is the downturn about to flip?

Dr Nick Cronin shares insights in the M&A market and what’s been happening  

2 minute read

 

Has M&A recovery finally started? Our analysis tells us that since 2021 when Global M&A was at its peak the market has dropped every year since. We thought this would normalise back to pre 2021 levels, but we soon understood in 2022 that the outlook would continue to slow, ending up at levels not seen since 2016.

 

We did think that 2024 would be a recovery year given that M&A almost always bounces back from back to back declines, as was the case in 2022 and 2023. The prior two downturns of 2007-2008 and 2001-2002 registered peaks and troughs declines of approximately 60% to 70%. This compares to a decline of 34.7% in 2022-2023, setting the stage for a more modest recovery, which appears to be playing out. 

M& A Activity - Main Graph.png

So, imagine the implications this has had on deals, here are the numbers:

M& A Activity - Small Graphs.png

We have seen these effects first hand with the average transaction taking closer to 12 months compared to the average of 9 months previously. 

 

The strategy we use to get the best outcome even in a tough market is to start with comprehensive research and data analysis before going to market. We know how to best leverage the assets that sit in our clients business and how this attracts the right buyer. This also enables us to know what is driving the range of multiples paid.

 

It’s also important to have a critical mass of engaged buyers and be sure we really understand the whole Buyer Universe. We have found that in several instances our transactions with the non-obvious buyers have produced the best outcome for our clients. 

 

Speaking to numerous PE firms in the UK, there has been an increase in deal flow and completions in Q3. Couple this with the natural seasonality of mid-market funds means I believe this downturn we have been seeing could be turning in Q4. 

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