M&A deals resurgent across Scotland and UK as private equity trades up -PwC

Deal volumes have also increased by 50 per cent compared to the same period in 2014, reflecting a resurgent UK deals market.

David Leslie, head of corporate finance, PwC in Scotland said: “While there has been a drop in headline numbers across all deal sizes this quarter, the UK market for larger deals was significantly more positive. This has been driven by a number of factors from the improving macroeconomic environment and increased market confidence to favourable capital and debt markets, and a strong UK/US deals axis.

“Here in Scotland, we’ve seen a number of quality deals in the last twelve months reflecting a strong international appetite for M&A across a range of sectors from business services and technology to real estate and bio-pharma.

“We’ve seen a slowdown, however, in the rate of transactions within the oil and gas industry, mainly due to the slump in oil price at the end of 2014. As the price continues to recover, we predict this will pick up again due to the combination of favourable market dynamics and strong international growth potential.

“Scotland is extremely capable of developing high quality businesses that can compete in the global marketplace. But we need to see this pipeline continue to evolve in the medium to long term, with emerging businesses and entrepreneurs who are eager to grow and develop their enterprises continuing to have access to a range of funds and initiatives that can support them as they progress. Encouragingly, over the last year, we have met a range of new and exciting Scottish businesses that will hopefully continue to grow and expand.”

Though corporate activity was the main driver of growth in deal numbers – accounting for 70 per cent growth compared to growth of just 2 per cent in private equity led deal numbers – private equity has shifted its focus to much larger deals, with average deal sizes leaping from £97m to £235m for the first three months of 2015.

Average corporate deal values remained much steadier at £153m up from £142m with total UK deal values rising by 96 per cent.

Respondents to the survey which tracks global assets over £25m involving a UK asset or acquirer, believe that the rapid increase in UK M&A activity will start to tail off later in the year, but that the outlook for Q2 remains positive.

Some 36 per cent of corporate respondents say they are likely to make an acquisition in Q2 2015, while 85 per cent of PE respondents say the same.

John Dwyer, global head of PwC’s deal business, said: “Embedded in these statistics are a number of transformational deals led by Private Equity. Our latest research indicates that our survey panel expect deal activity to remain strong for the next six months before tailing off towards the end of 2015.”