UK M&A set to surge in 2022

However, even Brexit has not dented sentiment in investment opportunities, with many respondents remaining upbeat on UK prospects as a deal destination. 40% said they expected the UK to become a more appealing venue for cross-border investment as funds benefit from the ability to buy companies at a favourable FX rate now that Britain has left the EU.

When it came to SPACs, UK sentiment remained pessimistic with only 38% expecting an increase, likely due to the FCA’s recent updates to listing rules. Comparatively, participants cited SPAC-friendly regulatory updates as a possible indicator that Europe is in line for more deals, with 76% anticipating an uptick of SPACs over the next 12 months in Europe.  

In terms of sectors, one third of respondents highlighted TMT as driving the most activity due to wide increases in digital consumption and connectivity. 70% said they also expected increased activity in distressed M&A to be across industrials and chemicals, real estate and construction, energy and mining, and utilities, all of which are cyclical industries that tend to underperform in times of recession.

The survey captured the challenges posed by the COVID-19 pandemic – including specifically the due diligence process - noting that 94% agree that due to the COVID-19 pandemic, M&A processes are taking longer. These challenges will remain, with 36% of respondents – a notable majority of responses within that question - viewing due diligence as being the most difficult part of the deal process over the next 12 months.

Justin Smith, Chief Marketing Officer, Ansarada, commented: “However the UK M&A market is not fully out of the woods. Deals are still susceptible to a complex mix of extenuating situations. As we’ve seen, driver shortages and supply chain disruption in the UK has severely hampered UK businesses recently, and the largely expected surge in COVID-19 cases locally is of course something to be mindful of. These events will have knock-on consequences for dealmakers. Deal speed, preparation and quality due diligence is going to be essential if the expectations from the Dealmakers we surveyed are to be met.”