Hold on to your hats. The tumbleweed has all blown away and the M&A gunslingers are back in town.
What a few days it has been for the dealmakers. On Wednesday we had the £2.5 billion tie-up between Barratt Developments and Redrow to create a £7 billion sector superheavyweight. Yesterday it emerged that FTSE 100 packaging giant Mondi is in talks with rival DS Smith about a potential £10 billion merger.
But is the flurry a sign of a sustained pick-up in M&A… or just a blip?
City advisers have been saying privately for some time that they expected something like this to happen early in 2024. So many stalled deals have been stuck on the runway for so long it was inevitable that once there was a break in the clouds there would be a rush to get them airborne.
M&A has been a tough gig since the start of the pandemic.
Even when that ended, the surge in inflation and interest rates that followed, and the unfunny knockabout of the late Johnson/ Truss period, meant that CEOs were too nervous about the outlook to push the button.
Things are calmer now, inflation and borrowing costs are heading south finally and the politics is less volatile.
For now. That said, who knows what the landscape will look like in a Trump-Starmer era possibly just a few months away?
Maybe that is why the M&A pipeline is suddenly so full. That window of relative stability may only be a brief one.
But for the City M&A teams that have endured such lean pickings over the past few years it is a chance to justify your existence at a time when many major banks are looking for big headcount cuts.
Let’s see what other deals emerge over the coming weeks. But for now at least, it’s back to business as usual
