The number and value of M&A deals involving UK companies fell sharply in the first quarter of 2007, but the overall outlook remains positive, it has been claimed.
Figures released yesterday by the Office of National Statistics (ONS) revealed that the volume of M&A deals fell by over a fifth during the first quarter of 2007 compared to the same period last year, and the value of such deals fell by two thirds.
According to analysts at Grant Thornton, foreign investment in UK companies dropped by 80%, from £24bn in quarter one 2006 to just £5bn in the first three months of 2007, marking the worst performance in three years.
UK investment abroad was also down to just £2bn in the first quarter of 2007 from £7.5bn in the same period last year, and UK investment in UK companies was down to £5bn from £7bn.
However, the analysts stressed that these figures should not be cause for concern and that the overall trend remains resilient despite the apparent sharp downturn.
“Fewer deals have taken place so far this year but the trend is pretty stable with both UK and global deal numbers consistently edging forwards since 2003,” said David Brooks, head of M&A at Grant Thornton Corporate Finance.
He added that the first three months of the year are often somewhat quieter in terms of M&A activity, and that the outlook for the months to come looks positive.
“A 66% drop in investment levels may look like the fund taps are running dry, but the reality is far different.”
© Crimson Business Ltd. 2007
