Firm deals down amid uncertainty

COMPANY deal activity fell sharply in the first three months of the year, as firms exercised more caution amid a weaker economic backdrop.

The latest data from consultancy PwC shows there were 26 mergers and acquisitions (M and A) in the March quarter, down from 46 in the same period a year ago, and 50 in the final quarter of last year.

Financial services was the busiest sector, taking up more than a third of deals, followed by telecommunications, media and technology, and then business services.

PwC corporate finance leader

Regan Hoult said buyers were taking longer to feel confident about a deal.

‘‘I think the general macro[economic] environment has definitely weighed on transactions,’’ he said.

‘‘And M and A does need confidence from buyers to come in and undertake a transaction.’’ Mr Hoult said the uncertain interest rate environment and higher inflation, which came following the Covid pandemic, added to the uncertainty.

Trade investors accounted for 92% of the deals, up from 75%, with private equity investors remaining quiet, PwC said.

It said 58% of the deals involved domestic buyers, compared to 46% in the fourth quarter of 2023.

PwC said sectors reliant on consumer spending, such as hospitality, saw weak M and A activity.

Despite a softer quarter, Mr Hoult said healthcare was a sector with a strong outlook. He said telecommunications, media and technology would also likely continue to attract strong interest.

‘‘Deals are more driven by [intellectual property] . . . which can be scaled offshore,’’ he said.