Dealsuite M&A monitor 2022
Slight increase in the number of buy and sell-side transactions in the UK&I mid-market segment (revenue between £1 and £200 million)
After the eventful year of 2021, the year 2022 also had a turbulent start. Many Covid restrictions were lifted, which resulted in a recovering M&A market. However, the war in Ukraine and the related increase in inflation and interest rates caused some uncertainty in the market. The increase in inflation and interest rates had a negative effect on the selling prices, but with the significant demand in the market, there has only been a slight decrease in the average paid EBITDA multiple.
After a sharp increase in the number of transactions in 2021, a slowdown in the market is visible. In Q1-2022, a slight increase of 4% in the number of buy-side transactions as well as an increase of 7% in the number of sell-side transactions was noted.
The distribution of transactions in Q1-2022 across the sectors is illustrated in Figure 2. There is a significant drop in the percentage of transactions in the Business Services sector. In Q2-2021, 25% of all transactions were closed in this sector. In Q1- 2022, this percentage dropped by 4% to a total of 21%.
The percentage of transactions in the Agri & Food sector has doubled from 2% in Q2-2021 to 4% in Q1-2022. Furthermore, the percentage distribution of transactions in Q1-2022 is similar to the distribution of Q2-2021 with a maximum difference of 1.
In Q1-2022, the average size increased again. In Q2-2021, 38% of transactions had a size above 5 million. In Q1-2022, more than half (55%) of transactions had a size above 5 million.