The Office for National Statistics (ONS) recently released their report on mergers and acquisitions involving UK companies, outlining transactions that result in a change of control and have a value of £1 million or more between April and June 2024.
ONS found the total number of mergers and acquisitions with a change in majority share of a company decreased significantly in quarter two (April to June) compared to quarter one (January to March), with 385 vs 463, respectively – a decrease of 78 mergers and acquisitions.
Domestic mergers and acquisitions, where a UK company acquires a UK company, significantly decreased in value in Q2. Compared to Q1, the value of mergers and acquisitions was £1 billion less. Meanwhile, the value of inward mergers and acquisitions, foreign companies acquiring a UK company, also decreased by £0.6 billion, and the value of outward mergers and acquisitions, UK companies acquiring a foreign business, was £0.4 billion lower than Q1.
Although there may be a range of factors that caused the decrease in mergers and acquisitions it can be assumed the General Election and subsequent change in Government had a significant impact. Under a Labour government, businesses may have to deal with a rise in Capital Gains Tax. This potentially has affected seller behaviour as they would have to pay more tax on any profit made after completing the sale – this may have led to more business owners holding onto their assets for now.
Our Head of Business Legal Services, Rob Moore said “Although overall there has been a decrease in mergers and acquisitions this quarter, I’m more than confident mergers and acquisitions rates will return to normal in the near future. There has been a lot of uncertainty with the change in Government, but once businesses know more about the landscape and changes in taxation, growth opportunities will become apparent. That said, we have experienced a surge of new enquiries and instructions in the last few weeks as business owners look to sell before any changes in taxation.”.
“At Taylor Emmet, our Corporate and Business teams are experts in mergers and acquisitions and have vast experience advising businesses and their owners”,
If you are looking for advice and guidance around mergers and acquisitions, our experts are on hand to help. Contact our Business team for support.