As 2024 draws to a close, the M&A market is poised for an exciting resurgence. At the start of the year, M&A volumes did not rebound as much as expected: the number of transactions declined by 25% in the first half of the year compared to the same period in 2023 (PwC, 2024a).
In the UK, this trend is also evident, with deal volumes remaining subdued, reflecting cautious investor sentiment and lingering economic uncertainties (PwC, 2024b). This fall in volumes can be attributed to several factors: high interest rates and the lingering effects of previous monetary tightening have weighed on investor confidence. Geopolitical challenges, such as the Russia-Ukraine conflict, rising tensions in the Middle East, and uncertainty surrounding global elections have further encouraged businesses to adopt a conservative, ‘wait-and-see’ approach. Despite this, the UK has experienced a notable increase in deal values: in the first half of 2024, UK deal values surged by 66% to £68 billion, up from £41 billion in the first half of 2023, indicating a robust appetite for strategic investments.
Despite these headwinds, economic conditions are evolving, and the outlook for deal-making is brightening. The Bank of England’s recent interest rate cuts are fostering a more favourable financing environment, lowering borrowing costs and enabling businesses to consider bold strategic moves (Bank of England, 2024), alongside inflation approaching the Bank of England’s target rate of 2%. Projections suggest that interest rates will continue to decline into 2025, creating further opportunities for growth (Refinitiv, 2024). Corporate strategics are pursuing inorganic growth through acquisitions to accelerate expansion and enhance market positioning.
On the financial sponsor front, private equity firms are under increasing pressure to deploy their substantial dry powder reserves which have climbed over the last few years: global private equity and venture capital funds held a record $2.62 trillion of total uncommitted capital as of July (S&P Global Market Intelligence), which will be a key driver in deal activity going forward.
The recent UK Autumn Budget adds another layer of urgency for business owners contemplating a sale. With Business Asset Disposal Relief rate set to rise from 10% to 14% in April 2025, and further to 18% in 2026, acting now could mean significant savings (HM Treasury, 2024). For many companies, the message is clear: the time to explore M&A opportunities is now.
Advancements in AI are also redefining the competitive landscape and reshaping M&A strategies. The TMT sector is leading the charge, fuelled by growth in SaaS and AI innovations. Globally, SaaS deal activity has climbed 20.5% year-over-year, driven by demand for enhanced digital capabilities; strong performance in Q3 2024, with 594 SaaS transactions, represents the second most active quarter on record (Software Equity Group, 2024). With interest rate cuts underway and momentum continuing, 2025 is shaping up to be another strong year for SaaS M&A. The media industry is also responding to shifting consumer preferences with strategic collaborations; 5G rollouts are sparking partnerships across the telecommunications sector (PwC, 2024b).
At Symmetry, we recognise the challenges that accompany today’s dynamic M&A market. Yet, we firmly believe that this period also presents remarkable opportunities for business owners ready to explore the next chapter.
With our tailored approach and deep sector knowledge, we are here to guide you through every step of the process, ensuring you achieve your strategic goals. Whether you're contemplating a sale or evaluating the market, our team is ready to help you unlock the full potential of your business.
Data Sources
● Bank of England (2024). Monetary Policy Report – November 2024. Available at: https://www.bankofengland.co.uk
● HM Treasury (2024). Autumn Budget 2024 Report. Available at: https://www.gov.uk/government/publications
● Refinitiv (2024). Data acquired using Refinitiv
● S&P Market Intelligence. Available at: https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/private-equity-dry-powder-growth-accelerated-in-h1-2024-82385822
● PwC (2024a). Global M&A Outlook 2024. Available at: https://www.pwc.com
● PwC (2024b). UK M&A Trends – H1 2024. Available at: https://www.pwc.co.uk
● Software Equity Group (2024). 3Q24 SaaS M&A and Public Market Report. Available at: https://softwareequity.com
● The Financial Times (2024). UK Inflation: Trends and Forecasts. Available at: https://www.ft.com
● Morgan Stanley (2024) Available at: https://www.morganstanley.com/ideas/mergers-and-acquisitions-rebound-2024
Comments