2020 was a year of huge contrast across the economic landscape, not least of which in M&A activity. A strong, confident start to the year for dealmakers was quickly followed by the shock and awe of lockdown which triggered a high-level of corporate uncertainty. This manifested itself profoundly in a (short-term) reduction in deal activity which, of course, requires confidence at its heart.
With a nod to the resilience of much of the corporate world and an eye to the future, this gave way very quickly to a bounce back in deal activity which has carried through from mid-Summer to date in spite of the November and current lockdowns.
Latterly, this has been boosted by heightened activity amongst privately owned business owners to seek a full or partial realisation ahead of the March budget and potential uplifts to capital taxes that this may signal.
As our own deal activity (some highlights of which are shown on the next page) demonstrates, M&A was particularly pronounced amongst businesses with a technology or software component. Also, those businesses that demonstrated a high degree of protection from a weak private sector were in strong demand.
Pricing was strong in these areas, spurred in large part by an ever-increasing amount of money available for spend amongst private equity investors.
As ever, sharp economic change causes many in the large corporate world to rethink strategy, direction and to re-prioritise markets and locations. This is currently fuelling deal activity internationally and domestically and, from a UK perspective, with Brexit uncertainty now largely removed, this is likely to drive M&A activity for some while to come.
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