Independence Exits

We bring you regular insights to help understand the ever-changing tides and trends within the UK M&A market.

Deal volume

  • Measure - we track the volume of announced deals through our data channels and compare that with previous periods
  • Q4 2024 - Octobers Autumn Statement provoked material increase in deal activity with vendors wishing to mitigate or least create tax certainty of any proposed Capital Gains changes. With the outturn of changes to later tax years and ongoing spectre of future tax increases, the rolling 6-monthly deal cycle between Budget & Autumn statement is likely to remain. Note that whilst material CGT increases are expected to inhibit disposal, the changes to Business Property Relief (taxed on Inheritance) may drive those with illiquid assets to create a disposal event in order to control
Last updated: 21/01/2025

Deal value

  • Measure - we follow the value of deals announced across our data channels and what that is likely to mean for future M&A activity
  • Q4 2024 - valuations across listed exits showed a 20.2% reduction on the same period last year and 31.3% down from a high of 2022. Unlisted exits show a multiple range which is broad across sectors but shows a 9.6% reduction on the previous year, likely representing the pricing-in of increased input and debt service costs
Last updated: 21/01/2025

Deal texture

  • Measure - we track the composition of buyers and transaction types from those deals announced in our data channels
  • Q4 2024 - Private Equity transactions (43% of deals) remain a key driver in the UK economy and should remain resilient given the extent of record accrued dry powder which exists. Venture Capital transactions have reduced (just 7% of deals) no doubt weighed down by the impact of contraction in SaaS/Technology valuations from their highs, leaving many underwater and needing further capital to grow to a scale where returns are viable. Listed activity remains chronically low as the UK Stock Exchange continues to struggle in comparison to the larger US market where IPO activity remains compressed post the advent of Interest Rate and Inflationary pressure.
Last updated: 21/01/2025

Risk free rate

  • Measure - we track the Bank of England Borrowing rate alongside that of UK/US treasury 5-yr Bonds, which form effective proxies for the level of returns available to investors without incurring transaction event risk
  • Q4 2024 - despite speculation earlier in 2024 that rate relief would lead to a reduction towards 2%, the cost of borrowing remains depsite some very marginal reductions most recently. The cost of treasury bonds has steadily increased as global fears persist regarding the leverage in global economies fearful of slowing GDP evident as input costs and consumer spend is impacted by global events
Last updated: 21/01/2025

Credit landscape

  • Measure - we track new entrants to the market and those providers who cease to lend, close products or leave the market
  • Q4 2023 - there were no material new entrants to the SME market in the last quarter but evidence both of contraction in credit supply from incumbents and the failure of a series of SME credit funds to close second/third fund vintages limit supply further - Boost & Co withdrawal from the UK market despite previously having received British Business Bank support is a prime example
Last updated: 21/01/2025

M&A vacancies

  • Measure - we track the volume of M&A vacancies in the job market as this is a proxy for expected future dealflow, with most M&A firms resourcing surprisingly short-term as they dont want to carry long term fixed costs in the event of expected shallow earnings
  • Q4 2024 - vacancies for M&A roles show a reduction of c70% from the peak of Q4 2022 and 30% versus last year. Whilst not all recruitment will be done publicly, with larger houses recruiting internally, it is expected given the wider macro pressures that job/deal contraction is to endure at least until the UK/US political uncertainty is reduced
Last updated: 21/01/2025

M&A salaries

  • Measure - we track salary surveys for the M&A market candidates to evidence the extent to which increases and bonuses are prevalent and using movement of these as a leading indicator to future deal volume
  • Q4 2024 - salary surveys show that pay inflation has reduced from over 12% in the same period last year (driven by inflation and the tailwinds of a more buoyant M&A market) to just 6% now with the number of staff receiving bonuses greater than 10% of salary reducing to a low of just 15% of the market. This implies lower activity and performance.
Last updated: 21/01/2025

Market News

Here we regularly share articles which influence the wider macro circumstances of the UK M&A market and are available to discuss how each of these may impact on your own circumstances and aspirations