The first half of 2024 witnessed a significant drop in merger and acquisition (M&A) activity in the North West. Deal volumes decreased by 14%, falling to 411 transactions. The dip in M&A activities marks a contrast with previous years.
Meanwhile, the region also saw a sharp decline in deal values. The total value plummeted by 60%, from £12.8 billion to £5 billion. This downturn underscores a challenging period for businesses in the North West.
Decrease in M&A Activity
The North West has seen a decline in mergers and acquisitions (M&A) activity in the first half of 2024. Compared to the same period in 2023, there was a 14% drop. The total number of deals reached 411, which is 5% lower than the 10-year average.
Deal values also suffered. The first half of 2024 saw values drop 60% from £12.8bn to £5bn. However, compared to the first half of 2022, even though the number of deals was 19% lower, their total value was 26% higher.
Mega Deals Missing
A significant factor in the decrease in deal values is the absence of mega deals, those exceeding £1bn. In the first half of 2023, three such deals were completed, totalling £8bn. This year, none have been reported.
Large transactions have also declined slightly. There were only nine large deals this year, compared to last year’s eleven. These were valued at £3.5bn.
Rise in Mid-Market M&A
While large and mega deals struggled, mid-market M&A transactions experienced growth. There was a 48% increase in these deals, reaching 40 transactions valued at £1.362bn.
Development funding deals also saw an upward trend. They increased by 31% in the first half of 2024 compared to the same period the previous year. Their value surged from £352m to £1.45bn.
Acquisition Trends
Acquisitions remain the most common deal type in the North West, despite a 19% decline in activity. There were 272 acquisitions in the first half of 2024.
The North West was involved in about 14% of all UK transactions this year. However, these deals only contributed around 3% of the total deal value.
One of the largest acquisitions was by Bury-based JD Sports Fashion. They acquired Hibbett Sports in the USA for £887m. Another significant deal was the £800m funding raised by RSK Group.
Sector Performance
Most industries in the North West experienced a slowdown in M&A activity. The professional services sector was the most active, with 95 deals worth £1.1bn.
Despite a 23% drop in the number of deals in professional services, their total value increased by 9%.
The wholesale and retail sector saw a 22% decline in deal volumes. The total value of deals in this sector plummeted 86%, from £11.5bn to £1.7bn.
Health and Hospitality Sector Growth
The health sector was one of the few areas with increased M&A activity. Deal volumes rose by 19%, totalling 50 transactions worth £110m.
The hospitality sector, although smaller in the overall market, saw growth. The volume of deals rose by 15%, and their value increased dramatically by 443%, totalling £71m.
Venture capital-funded transactions fell slightly by 6% to 68 deals in the first half of 2024. However, the volume of development capital deals rose by 31%.
Debt Funding
Debt funding in the North West remained stable, with 45 transactions in the first half of this year. This is almost the same as last year’s 44 transactions.
The most active lender was HSBC, participating in seven transactions across various sectors. Thincats followed, with four transactions.
Adviser Rankings
In legal advisory services, Mills & Reeve topped the rankings with 20 deals. They moved up from 13th place last year.
Napthens, the previous year’s leader, took second place with 19 deals.
K3 Capital Group led the financial advisor rankings with 21 deals. Grant Thornton held onto second place with 14 deals.
The first half of 2024 has presented a stark picture of M&A activity in the North West, with both deal volumes and values facing substantial declines. Despite these setbacks, areas such as mid-market transactions and the health and hospitality sectors showcased resilience and growth. The advisory firms also displayed strong performances, solidifying their positions in the industry.
The data suggests a nuanced landscape for M&A in the North West. Whilst some sectors face challenges, others are finding opportunities to grow and innovate amid a shifting economic environment.