International Lawyer Says The Signs For More Cross Border Activity Are Encouraging

Mergers & Acquisitions (M&A) activity whereby UK companies are targeted by overseas buyers is back to pre-Covid-19 lockdown levels, according to analysis by law firm Irwin Mitchell of Experian’s MarketIQ corporate deal database.

The law firm has examined Experian’s comprehensive database of corporate transactions and says the volume of deals involving the 10 most active countries involved in UK M&A stood at 399 in the first half of 2021. This equates to 13.1% of all transactions involving UK targets.

This compares to 336 in H1 2020 and 339 deals in H2 2020. Transaction levels were at 402 in H1 2019 and 393 in H2 2019.

Interest in UK businesses from the United States (US) has always been high and according to MarketIQ, over the last five years the total value of M&A involving UK target businesses and a US acquirer reached £255bn.

The level of activity between the US and the UK was understandably lower during 2020 with just 279 deals completed during the 12 month period.

However, with four months still to go in 2021, there have already been 219 transactions involving US firms bidding for UK businesses, compared to 172 at the same time last year.

This latest analysis tallies with other research by Refinitiv which said takeovers of British companies hit a 14-year high by value in the first seven months of 2021. It said that deals involving a British target totalled $34.9 billion in July, 5% less than June but more than seven times the value in July 2020.

Earlier this year, Irwin Mitchell advised on the sale of Runcorn based AutoCoding Systems Ltd to JBT Corporation, an American global technology solutions provider to high-value segments of the food and beverage industry.

Expert Opinion

“The UK has always been a popular destination for investment from overseas businesses.

“Since the beginning of 2017, there’ve been a significant numbers of deals involving UK companies which have been the target of a bidder which is based overseas. We are seeing this currently in our deal flow and there are reports that there is a ‘frenzy’ of interest from US businesses into the UK.

“The US alone completed over 1,300 deals involving UK-based targets and according to MarketIQ these were worth in excess of £200bn.

“It is encouraging to see that deal levels have recovered to pre-lockdown levels and our analysis reveals the value of transactions in the first eight months of 2021 are almost the same as they were for the whole of last year.

“As the economy recovers I’d expect these higher levels to be maintained. I also predict that we will see increasing activity amongst UK businesses targeting overseas firms.

“In 2019, UK businesses targeted and completed deals in 74 countries but in 2020 this fell to 60. The number of transactions in 2019 was over 1,000 but in 2020 it fell by almost 200. The signs are positive because already this year there’s been over 500 deals with a combined value of £91bn.”
Bryan Bletso - Partner

Irwin Mitchell has recently published a guide to support overseas companies when they are looking to come into the UK either by acquisition or investment.