Deal makers hoping for a revival in the summer
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Dealmakers hope for a rebound in the summer as analysts warn the London Stock Exchange faces a bad start to the year
- The first three months of 2023 are expected to be ‘subdued’, according to Peel Hunt
- But closing deals could spark another uptick in the summer of 2023
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The London Stock Exchange is off to a bad start to the year with warnings that M&A will be few at the earliest in the spring.
The first three months of 2023 are expected to be ‘subdued’ as economic concerns – such as uncertainty about further interest rate hikes – deter investors, according to brokers at investment bank Peel Hunt.
But a period of “relative political stability,” as well as clarity on rates and inflation, could lead to deals closing before the summer.
Jitters: The London Stock Exchange is about to start the year badly
British companies continue to be good targets for foreign investors and private equity firms later this year, said Michael Nicholson, head of mergers and acquisitions at Peel Hunt.
“If there is no unexpected shock, we expect a broader recovery,” he added.
London is already in the middle of a recession after the number of large mergers and acquisitions declined in 2022.
According to analysis by investment platform AJ Bell, there were 49 bids for London-listed companies last year, compared to 82 in 2021.
In his annual report on acquisitions, Peel Hunt said British companies were less likely to take risks when buying competitors. For example, they may avoid deals that would see them entering new countries or selling new products for the first time.