UK M&A & Fundraising Landscape Update
8th Oct 2024
MarktoMarket (MtM) is a data and analytics platform built to help advisers and investors, especially those in SME markets, provide world class advice and make robust, informed investment decisions.
The platform is used by professionals in corporate finance, private equity, debt, accountancy, wealth management and law for a variety of use cases including the valuation of private companies, the identification of investment opportunities, the understanding of specific markets and the benchmarking of company performance.
MtM have kindly shared the highlights of their recent insights reports with W&A revealing intriguing trends in UK M&A, valuations, and fundraising activities which we in turn have summarised below. Some insightful and interesting reading in here.
M&A Activity and Valuation Trends (H1 2024)
The first half of 2024 saw M&A activity in the UK cool slightly as economic challenges and geopolitical uncertainty impacted deal volumes and valuations. Median EBITDA multiples remained stable at 6.0x, in line with full-year 2023 values, signalling that deals are still transacting, albeit at lower levels.
Sectors like Industrials & Business Support Services dominated the M&A landscape, accounting for 50% of transactions. Technology, Media & Telecommunications (TMT) also showed resilience, while the Consumer sector saw a reduction in activity. Deal multiples tended to rise with larger transactions, with the Mid Cap range (deals between £50 and £250 million) showing multiples around 9.4x, slightly lower than in 2023.
Fundraising Trends (H1 2024)
On the fundraising side, equity capital invested into UK startups and scale-ups totalled £5.9 billion in H1 2024, marking a 27% increase over the same period in 2023. This growth was driven primarily by larger Series B+ rounds, where companies raised over £3.7 billion, a 74% increase from H1 2023. They recorded several of their highest-ever round sizes, which involved raises by Wayve, Octopus Energy and Monzo. Pre-Seed funding, representing smaller, early-stage rounds of £250,000 to £1 million, showed stability with £432 million raised, indicating investor confidence in early-stage innovation despite wider economic pressures.
Interestingly, Seed-stage rounds (those between £1 million and £3 million) underperformed, with a 29% drop in capital raised, highlighting potential investor hesitance in backing startups at this stage of growth.
September 2024 Valuation Barometer
August 2024 saw notable shifts in the UK M&A landscape. Deal volumes fell to 272, significantly down from July's robust performance of over 400 deals. However, deal values surged to £34.1 billion, largely due to high-profile transactions such as the acquisition of Electricity North West by Iberdrola and BT Group's stake sale to Bharti Global, showing that while fewer deals occurred, the average value of those deals increased.
Noteworthy deals also included strategic moves in sectors like utilities, healthcare, and technology. For instance, Apax Partners completed the acquisition of Thoughtworks, valuing the firm at $1.75 billion, reflecting strong demand for tech-driven services.
Buyer & Sector Focus
Trade buyers dominated the market, leading 57% of M&A activity. Private equity-backed firms, however, were not far behind, comprising 27% of the deals. Active sectors included renewable energy, healthcare, and technology. The month’s largest transaction involved Iberdrola’s acquisition of Electricity North West, a move that significantly expanded its footprint in the UK.
Conclusion
In summary, while UK M&A and fundraising activity softened in some areas, high-value transactions and substantial fundraising rounds are helping maintain overall market vitality. Larger deals and later-stage funding rounds, particularly in technology, utilities, and healthcare, continue to drive market optimism. As we move into the latter half of 2024, economic conditions and investor appetite will play pivotal roles in shaping further developments.
A big thanks to our friends at MarktoMarket for sharing, and some interesting notable correlations with patterns that we at W&A are seeing in the recruitment markets too. Please feel free to get in touch with the brilliant team at MarktoMarket to learn more about how their rich, easily searchable datasets could benefit you and your business.