This article was originally published in December 2020..

The spring lockdown did not stop UK M&A in its tracks, but activity slowed. Faced with the fog of economic uncertainty, some buyers put their chequebooks back in the drawer, and vendors pressed pause. Since the first lockdown ended – and despite a second – activity has picked up. It picked up in anticipation of good news on the vaccine front rather than because of it. Even with Brexit questions still unanswered, deal announcements now come thick and fast as this most unusual of years approaches its close.

Data published by MarkToMarket reveals that this autumn has been almost as busy as in 2019. Some 306 UK M&A transactions completed in September 2020, compared with 349 in September 2019 – just a 12% year-on-year decline. The September 2020 figure compares with the lockdown low-point in May, which saw just 167 deals announced. Given the uncertainty back then, it is surprising that any transactions closed, let alone 167.

Pet care, pharma services, insurance, home security, gaming, and e-commerce logistics, among other subsectors, were all lockdown winners and multiple transactions have been been completed in each space since the summer. Recent weeks have seen the purchase of annuity provider Rothesay Life for £2.8bn, a £3bn approach for G4S, and Hg Capital’s acquisition for £1.5bn of Hyperion Insurance. Yes, the chequebooks are well and truly back out.

What about valuations? Surely some combination of the pandemic, our parlous UK public finances, and Brexit would serve to cool the ardour of even the most aggressive buyers? Yes and no. The data suggests that valuations have declined, but not by much. The average multiple of EBITDA paid in the month immediately before the spring lockdown was 11.5x, compared with 10.5x in September. The average multiple of revenue was 2.4x, and this fell to 2x in September. Declines, yes, but smaller declines than one might have expected.