M&A activity slumps in June

M&A activity slumps in June

Mergers and acquisitions activity in the financial services sector slumped in June, according to analysis by Imas.

The figures for the second quarter of 2016 suggested M&A activity was in line with previous quarters, but the monthly figures showed a different picture.

The number of deals with estimated values of £5m or more fell in June to only six, compared to 17 in April and 22 in May.

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Meanwhile, transactions announced of more than £100m of value also remained at a similar number to previous quarters.

Olly Laughton-Scott, founding partner of Imas, said they were modest in size compared to the very large deals announced in the previous three quarters.

“It may suggest that the referendum has had an impact on transaction flows,” he stated, adding uncertainty is undoubtedly not helpful for M&A activity.

“But, among certain acquirers any pricing weakness is viewed as a unique buying opportunity.

“Several private equity firms have taken advantage of strong demand among investors in recent years and raised substantial funds, which they continue to deploy in attractive investments.”

Mr Laughton-Scott pointed to figures which showed that in 2013 private equity funds and their investee companies represented 30 per cent of the buyers of businesses in the UK financial services sector worth potentially £5m or above.

But by the second quarter of this year, they represented 43 per cent of buyers, the largest category of investors in the UK financial services sector.

Mr Laughton-Scott added: “We continue to operate with the confidence that a strong commercial logic will drive M&A developments and supply and demand will find its new level of equilibrium as the market assess the potential consequences of the outcome of 23 June.”

According to Imas’s analysis, the wealth management sector saw “unusual levels of activity” in June.

This included BP Marsh & Partners acquiring an additional 8.02 per cent stake in LEBC, Close Brothers acquiring EOS Wealth Management with £300m of client assets and Succession Group acquiring Maze Wealth.