Wednesday, 16 December 2020 00:01

“Healthy appetite” for M&A activity across Scotland

Dane Houlahan, head of M&A in Scotland for KPMG

Corporate dealmakers in Scotland are optimistic about the prospect of heightened mergers and acquisitions activity in 2016, according to a new survey by KPMG.

The professional services firm surveyed dealmaking professionals in Glasgow and Aberdeen, and found that 57% expect the majority of deal activity in the next twelve months to take place in the SME sector.

North American companies are predicted to be the most heavily involved in Scottish deals, followed by the Far East.

Three out of five professionals surveyed felt the biggest barrier to deal activity is the difference in price expectations between buyers and sellers. The majority of the 60% do not expect prices to begin converging before the end of March, with 57% suggesting the sector won’t see a reduction in the gap for at least 6-12 months.

Dane Houlahan, head of M&A in Scotland for KPMG, said: “It’s not surprising dealmakers are predicting high levels of M&A activity in the next 12 months. The economy is, by and large, in a healthier state and the banks are in a strong position to lend to ambitious businesses across the country.

“The US economy has been faring particularly well and as indicated by dealmakers, we may see larger American organisations acquiring both successful Scottish firms, while also throwing a lifeline to struggling SMEs in the oil and gas sector as they look to absorb North Sea expertise into their own organisations.

“We could also see an increase in deal activity between oil and gas businesses in Scotland, with firms looking to take advantage of the landscape and pick up assets at cheap prices, while also selling off their own non-core divisions as a cost-saving exercise.

“A lack of convergence in price remains a significant barrier in the eyes of dealmakers across the country. The findings suggest we may only start to see deal activity pick up in the latter part of next year.”

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