489: total number of UK deals across 2017
£120 billion: the approximate total value of all these transactions
20%: rise in deal activity in the sector compared to 2016
Merger and acquisition (M&A) transaction activity in the UK’s Business Services sector grew by 20% throughout 2017, new analysis from international M&A and debt advisory firm Livingstone, shows.
In total, there were 489 UK deals worth nearly £120bn reported in the year. Q2 saw the highest deal activity, with 129 deals, compared to the lowest activity of 116 deals in Q4, suggesting appetite and confidence has not been deterred by any economic risk or uncertainty posed by Brexit.
These outputs represent a 20% volume uplift of M&A activity levels compared to 2016. The shortage of assets versus the availability of capital has also driven valuations up to a cyclical high-point, averaging nearly 10x EBITDA over the year.
Business Services represents the largest part of the UK economy and is a sector in which the UK continues to produce world-leading companies. As a result, it remains a highly active market for M&A, attracting interest from global strategic buyers and investors.
Livingstone’s analysis points towards increasing levels of deal activity, buyer interest and high valuations in sub-sectors such as: cyber security consulting; compliance & regulatory consulting, testing and inspection services; outsourcing & procurement and insurance broking.
Alex John, partner at Livingstone, comments on the findings:
“The market is currently flush with cash – be it from corporates, private equity sponsors or lenders – all looking for these high-quality assets to invest in for growth and returns.
“In the short-term, we don’t expect to see these dynamics materially changing, certainly in the first half of the year. Further ahead, it’s possible that as we approach closer to March 2019 that we may start to see a more marked slowdown in investor activity.”