The UK experienced a huge drop in M&A activity in 2019 – with inward investment dipping by almost a third, and domestic activity seeing a reduction of 69%.
Data published today by the Office for National Statistics (ONS) showed substantial decreases in merger and acquisition investment across the board.
Inward investment – overseas firms buying into UK businesses – dropped from £78.8bn in 2018 to £53.8bn in 2019.
ONS experts qualify this reduction by indicating that 2018’s figures were unusually high due to Comcast Corporation’s acquisition of Sky PLC for just over £30bn.
However, 2019’s total was bolstered by 12 high-value deals of between £1bn and £10bn, compared with six such deals in 2018.
The total for the year was still higher than the values recorded in the years between 2010 and 2015.
However, outward investment – UK firms investing overseas – fell too, albeit by a significantly smaller amount, reducing from £23.8bn in 2018 to £20.9bn in 2019.
By far the biggest reduction in percentage terms was the domestic M&A activity, which decreased from £27.7bn in 2018 to £8.7bn in 2019.
The ONS says that figure means 2019 is broadly comparable with other spells of lower domestic M&A activity between 2009 and 2015, and from 1990 to 1994 – both periods immediately following recessions.
The ONS report, written by Andrew Jowett, concludes: “The values of inward and domestic M&A transactions were both around £20bn lower in 2019 than in 2018. However, for inward M&A, this partly reflects one very-high-value deal completed in 2018. Separating that deal from the other deals in 2018 shows that the value in 2019 was slightly higher.
“There were also more deals with values between £1bn and £10bn in 2019 compared with 2018.
“The value of domestic acquisitions in 2019 was comparable with previous periods of domestic M&A. The value of domestic M&A in 2019 was £8.7bn, which was similar to the annual average domestic acquisitions between 2009 and 2015 (£8.4bn per year) but also between 1990 and 1994 (£8bn).”