Thu. Feb 22nd, 2024

    Negotiators willing to spend ‘wall of money’ on new takeover deals

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    Deals are being struck again as confidence returns, PwC’s UK boss said.

    Kevin Ellis, chief executive of the auditing giant, said potential buyers are ready to unleash a “wall of money” they have been waiting for for the past year.

    Mergers and acquisitions (M&A) activity has declined since 2022 as rising interest rates made it more difficult to finance deals.

    But Ellis said a “more positive environment” late last year turned into increased “activity levels in December and January” as private equity firms and sovereign wealth funds contemplated acquisitions.

    ‘Positive vibes’: Companies starting to consider acquisition deals, says PwC UK boss

    “I think the situation is changing now,” Ellis told the Mail at the World Economic Forum in Davos, Switzerland.

    “Our indicators in the bargain market have turned green,” he added, noting that they had been “very solidly red” over the past year. Recent figures show that M&A activity involving UK companies fell 33 per cent last year to £208 billion, the lowest level since 2009 and bigger than the 17 per cent drop seen Worldwide.

    But not all takeover deals will necessarily be welcomed, especially if they mean more British companies being snapped up cheaply by foreign buyers.

    Ellis said the recovery was across all sectors, although “the big deals probably haven’t been reached yet.”

    He added: “When there is a wall of money, when no transactions have taken place for a long time, the money has yet to find a home.”

    ‘People will sit idly by because they can’t see the value. “You can immediately see the value they are quickly regaining – it’s the fear of missing out factor.”

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