In a nutshell…thoughts on the Yorkshire M&A market as we start the new year

Here at Deloitte, we’ve have been hosting a series of M&A discussion events with our friends in the Yorkshire M&A community. We’ve been grateful for bankers, solicitors and equity funders taking the time to join us and talk about their year (2022) and their thoughts for what comes next. We’ve been running these sessions for a number of years now, ordinarily at this time of the year but given just how much has been going on we decided to run some events in the Autumn. We always respect the ‘Chatham House rules’ of confidentiality, but the following themes are worth sharing:-

1. Relentlessly busy – numbers will prove out in empirical terms, but it’s felt like there has been record levels of activity across all aspects of M&A and funding markets. This has been driven by a number of factors, the economy initially recovered strongly post pandemic, and many businesses have looked hard at themselves and consequently doubled down on where they see their core strengths and divested of anything increasingly non-core. Buoyant supplies of equity and debt capital has made for busy times.
2. Little crystallised stress – insolvencies and financial stress remain at very low levels indeed. This has been true throughout the last year or so and despite some high-profile retail stories dominating the news flow, it remains the case.
3. Natural degree of caution – no one can ignore the predictions of the OBR and others on a UK recession. Businesses are starting to be more cautious in their investment actions and looking to build contingency plans to control costs and manage interest rate exposure. Indeed, it is interest rate hikes that is highest on the agenda, but many Yorkshire businesses are hopeful of riding out the cycle on the back of cash reserves built up in better times.
4. Real inflation remains high – for many, inflation has been building for the last 18 months or so and margins have been preserved by passing increases through the supply chain. The continued inflationary pressure from energy prices is hard to predict, but some sense that the market for talent is settling down with less attrition and more modest pay increases predicted (notably in the private sector).
5. Working together – this is the most resounding theme. Here in the Yorkshire region, we’ve an incredibly experienced and thoughtful community of business leaders, funders and advisors. Optimism remains high and levels of M&A and funding activity are expected to remain good. By talking more often, talking more quickly, and where appropriate talking more openly, we can all help sustain and grow the prosperity of our region for all.

On behalf of the M&A community here at Deloitte, we wish you a very happy new year and look forward to working with you all in 2023.