The right time to sell? What the current UK M&A market can tell us about transactions

For companies looking to sell, timing is everything. The right time to sell can depend on a range of factors, including market conditions, industry trends, and the company’s current financial health.

M&A data from the Office for National Statistics (ONS), which covers the third quarter of 2022, shows that activity in the UK continues to be affected by various global pressures.

Between January 2022 and September 2022 M&A activity in the UK was fairly consistent, with each quarter experiencing minor increases and decreases.

For example, the number of monthly M&A increased between July 2022 (147) and August 2022 (164), before falling to 148 by the end of September 2022*.

In total, during the third quarter of last year, there were 459 completed domestic and cross-border M&As.

This is nine fewer deals than the previous quarter, but more significantly 159 fewer deals than the same quarter a year before.

Despite this fall, the value of inward and outward M&A rose higher in Q3 when compared to the previous quarter. Indicating an increase in cross-border deals. In comparison, domestic M&A fell from £3.3 billion in Q2 2022 to £2.6 billion in Q3.

Clearly then, during this period there was a greater interest in international M&A deals or at the very least an increase in the value of the deals completed.

Of significant interest is the spike in inward M&A in Q3 2022, which was £13.9 billion higher than in Q2 2022. The softening of the value of the pound in recent years has seen surges in inward M&A in the UK, particularly during Q3 of 2018 and Q2 of 2021.

So, what can we learn from this data?

One key takeaway is that market conditions can play a significant role in M&A activity. In a strong market, buyers may be more willing to pay a premium for acquisitions, making it a good time for sellers to consider offers.

In a weaker market buyers may be more cautious, and valuations may be lower, making it more challenging for sellers to achieve a favourable deal.

Another factor to consider is industry trends. Certain sectors may be more attractive to buyers than others, depending on factors like growth potential, market share, and competition.

If a company operates in a sector that is currently in high demand, it may be a good time to explore a sale.

That is why watching M&A trends carefully and reviewing other deals in progress can help owners to understand the appetite and potential value of their business.

Of course, it’s not just external factors that can impact the right time to sell. A company’s financial health and strategic objectives are also critical considerations.

This is why it is important to spend the years ahead of an anticipated sale nurturing your finances, clearing down debts and/or making necessary investments that make your organisation healthier.

The current UK M&A market trends, outlined above, provide valuable insights into whether it might be the right time to sell.

However, you need to understand the various external and internal factors that may affect the value of your business and the likelihood of it selling at a fair price.

If you are looking to buy or sell a business find out how our experienced corporate and commercial team can help.

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