The value of mergers and acquisitions in the UK has halved year on year in the first quarter of 2016, on a slowdown at the top end of the market, according to analysis from Experian.
The volume of M&A deals also fell, with 1,372 deals announced in the first quarter of 2016, a 15% fall from the 1,616 transactions recorded in the same period last year. The volume was also down by around 20% quarter on quarter.
Experian said: ‘After 2015’s highs, this represents the most subdued quarter in almost three years, and mirrors a global trend for declining activity.’
But it said it was not yet clear whether the fall represents a ‘small blip’ or an indication that the volume of deals will be more modest in the year ahead.
In the first quarter of the year, there were just seven mega (£1bn-plus) transactions, down from 15 in the same quarter last year. This caused the value of deals to fall from £82.5bn in 2015 to £41.8bn this year.
The number of large deals (£100m to £1bn) in the quarter fell 40% year on year, while mid-market deals (£10m to 100m) fell 29%, and small deals (£500,000 to £10m) declined by 22%.
Deal volumes in London dropped sharply in the first quarter of the year, marking the slowest start to a year since 2009, when the UK was in the deepest point of its recession.
The number of completed transactions fell to 509, a drop of 26% from the first quarter in 2015.
Meanwhile the total value of London deals hit £17.5bn, down from £46bn in 2015, with high-value corporate deal-making, which was a prominent feature in 2015, largely absent at the start of this year.
National firm Gateley was the busiest legal adviser in the quarter, advising on 31 deals, while international firm Davis Polk & Wardwell topped the table according to deal value, advising on £7.5bn worth of deals.
James Turner, research manager at Experian Market IQ, said: ‘A more cautious approach, particularly evident amongst the large corporates, alongside reduced private equity activity, market volatility and fewer deals involving UK SMEs, has produced a more subdued start to the year than many expected.
‘Still, the UK remains an attractive target for overseas investment, there are pockets of growth and, while deal volumes on last year’s scale look unlikely at this point, the outlook remains broadly positive for deal-makers as we move into the second quarter of the year.’