Prism’s Peter Watson Comments on the Latest National Statistics

The latest published figures on M&A activity have been released this morning from the office of National Statistics.

The figures make somewhat depressing reading – with acquisition activity down in each principal category – inward investment, outward investment and internal M&A – with both value and number of transactions declining since the last quarter of 2011 – and lower than at any point since the second quarter 2010.

The report suggests that concerns over Eurozone debt and economic growth are likely to be the underlying causes, and this is difficult to dispute. We would also suggest that the recent movement in exchange rates is another factor affecting the confidence to undertake cross border acquisitions, whilst transaction activity in the UK remains highly sector specific. Our own analysis of activity in the ICT sector (information, communication and technology) identified 27 UK/UK acquisitions, compared to the 56 transactions identified in the Government statistics, accounting for a significant percentage of the total. Activity for the first two months of the second quarter show continued levels of activity and it will be interesting to see whether other sectors display greater strength in Q2.