According to figures from business advisory firm Dow Schofield Watts, cross-border deals accounted for over a quarter of all UK corporate transactions during 2023, though the proportion was lower than the previous year due to a sharp drop in overseas acquisitions by UK companies. 

DSW’s figures show that while the total number of deals involving UK companies fell by eight percent last year to 3,376, the number of cross-border transactions declined faster, falling by 26 percent to 929. This was largely driven by a decline in overseas acquisitions by UK companies, which decreased by 36 percent to 388. The figures show that cross-border deals accounted for 32% of all transactions in 2022, compared to 27.5% last year.

US companies were by far the most active foreign buyers in 2023 and responsible for over a third of all overseas acquisitions, followed by buyers from Sweden, Ireland, France, Germany, and the Netherlands. The US was also the most popular destination for UK companies to acquire overseas, followed by Ireland, Australia, Germany, the Netherlands, and Canada.  

Callum Sellar, Director of DSW’s corporate finance team and a board member of its international advisory network Pandea Global M&A, said: “The wider macroeconomic environment has had a significant impact on overseas M&A activity by UK companies, with declining market confidence throughout 2023. Sterling’s weakness against the dollar resulted in a decline in UK acquisitions in the US, although it continued to be the most active outbound corridor throughout 2023.

Meanwhile, the UK remains an attractive marketplace for overseas buyers, in particular those from the US. The US remained the leading source of overseas buyers of UK companies in 2023 and this is expected to continue in the coming year, largely due to more prudent valuations in UK public markets.  

As yet the impact of the National Security and Investment Act, which was introduced in 2022 and allows the UK government to scrutinise and block foreign takeovers, isn’t clear in terms of deal volumes. However the novelty of this regime and its broad scope, covering around 17 sectors, has continued to present challenges throughout 2022 and 2023.  

Many headwinds are still in existence this year, however with interest rates expected to fall, there should be an uplift in market confidence which will drive increased activity throughout 2024 as companies look to grow in the improved economic environment.” 

DSW’s figures, compiled using data from Mergermarket, show that technology, healthcare, and ESG were key trends in cross-border deals during 2023. 

Callum Sellar further added: “Technological disruption, the rise of artificial intelligence, and climate change are all helping to shape the global deal market. The technology sector was the most active in terms of investment and completed deals and is expected to produce the highest level of growth in the year ahead. Meanwhile, global trends in the wake of the pandemic and our evolving healthcare needs are driving investment in the healthcare sector.

ESG is another trend worthy of note. The energy transition continues to drive business transformation in energy and utilities, and potential buyers are increasingly interested in businesses with ESG credentials. 

Overall, global trends suggest that in 2024, there will be an increase in M&A activity. There is clear pent-up demand from investors, and with interest rates expected to stabilise, coupled with falling inflation, predictions for 2024 point towards a more positive outlook for the year ahead.” 

Notable inbound acquisitions during 2023 included Danaher Corporation’s £4.5bn acquisition of Cambridge antibody producer Abcam Plc; Chart Industries’ £3.8bn acquisition of Howden, a Renfrew-based provider of air and gas handling products; and Thermo Fisher Scientific’s £2.3bn acquisition of Birmingham medical diagnostics manufacturer The Binding Site Group. All three buyers were US-based. 

Outbound acquisitions included AstraZeneca’s £1.5bn acquisition of US-based CinCor Pharma, Howden’s £1.3bn acquisition of US reinsurance brokers TigerRisk Partners, and Inchcape’s £1.3bn acquisition of Chilean automotive distributor Derco. 

Pandea Global M&A

Pandea Global M&A is a global network of selected independent firms primarily focusing on the origination and execution of middle market M&A activities. Services provided include buy- and sell-side M&A advisory and debt and equity fundraising across a broad range of sectors.

Pandea is represented by 300 deal-making professionals over 50+ offices in 30+ countries, focusing on deals with transaction values between €5 million and €500 million.

To date, member firms of Pandea have completed over 2,500 transactions worth €30 billion in value.

Our global members advise public and private companies, family-owned businesses, private equity firms, family offices, management teams, and entrepreneurs around the world.

If you would like to talk to the team about your firm joining, please get in touch.