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Mergers and acquisitions remain low in second quarter

UK Mergers and Acquisitions (M&A) activity remained low in the second quarter, while the volume of deals fell 39% like-for-like.

Figures from ONS suggested that business confidence was lacking as transactions continued at a low rate.

Despite M&A activity flagging, outward acquisition values were up from last year, while the number of businesses bought by firms overseas decreased, and the value of domestic acquisitions fell by 73% compared with the first quarter in 2011.

Domestic acquisition values reflected similar figures reported in the second quarter of 2009, while overall outward, inward and domestic acquisitions fell in value year-on-year.

The London Olympics took some blame for delayed completion dates, and ONS suggested that businesses may have been hesitant to initiate deals because of concerns over increased staff absences and holidays.

A fragile global market was also cited as a contributing factor to sustained low levels of business transaction activity.

Graeme Leach, Chief Economist at the Institute of Directors, said: “These figures are disappointing, but hardly surprising.

“Three factors are combining to make companies very wary of any Mergers or Acquisitions activity: we are stuck in a liquidity crisis, banks are de-leveraging (in part to meet regulatory requirements) and there are great worries about both the domestic and the global economy. In short, very few companies have either the cash or the appetite for M&A.”

This was posted in Bdaily's Members' News section by Miranda Dobson .