Merger and acquisition (M&A) activity in the º£½ÇÊÓƵ saw a downturn in the first half of the year, as investors pursued strategic deals amidst market volatility.
The total value of º£½ÇÊÓƵ M&A deals fell by 12.3 per cent from £65.3bn to £57.3bn, according to a report from professional services group PwC, as reported by .
There was also a softening in deal volume with only 1,478 transactions during the period, marking a significant 19.1 per cent drop.
Lucy Stapleton, global head of deals at PwC º£½ÇÊÓƵ, commented, "The º£½ÇÊÓƵ M&A market has been characterised by a sense of restrained momentum."
"There's a strong pipeline of deals ready to go, but many remain paused due to ongoing volatility."
Deals: Quality over quantity
Despite the decrease in the number of deals, the average deal size reached £162.9m.
This was propelled by a wave of fewer large-scale investments, as investors chose resilient assets with long-term growth opportunities over a large quantity of deals.
Stapleton added, "Investors are focusing on value creation, with a clear deal objective and a willingness to deploy capital into sectors where growth is critical."
"When confidence returns more broadly we may see a sharp uptick in activity, and those who are prepared will be best placed to seize the opportunity."
PwC reports that investors primarily opted to invest in the industrials and services sectors, which together attracted 400 M&A deals.
Other sectors that performed well included financial services, technology, and telecommunications.
Regarding deal value, financial services dominated the league tables, securing £17bn, primarily propelled by four 'mega deals'.
Colin Smith, partner at PwC, said, "Industry dynamics are playing a decisive role in shaping deal activity."
"The data shows that investors are not just chasing growth but are targeting sectors where structural change is creating long-term opportunity."
Second half outlook
Analysts remain bullish about the second half of the year, though cautioned that M&A market expansion is far from certain.
They contended that "macroeconomic stability and resolution of geopolitical uncertainties" are essential to strengthen favourable º£½ÇÊÓƵ market conditions.
The present condition of the º£½ÇÊÓƵ market and increasing availability of investor capital indicates a steady environment for dealmaking could emerge if broader challenges are addressed.
Stapleton said, "The fundamentals are encouraging as interest rates are easing, liquidity is improving, and equity markets are strong. We're seeing a shift from passive optimism to active investment."
