There is a rise in inward M&A, increasing by £1.1bn from the previous quarter. Credit: Inside Creative House/Shutterstock.

The Office for National Statistics (ONS) has reported that foreign companies have acquired £7.8bn worth of UK firms in the latest quarter.  

This marks a rise in inward mergers and acquisitions (M&A), increasing by £1.1bn ($1.27bn) from the previous quarter.  

The trend of international ownership in the UK continues to grow, driven by various economic and strategic factors. 

Sharing the opinion regarding this matter, Spencer Wes Corporate and M&A partner James Klein said: “It is unsurprising that certain M&A activity levels have continued over the Summer. This has been a continuing trend as overseas buyers – particularly US buyers – continue to target lower priced or more attractively-priced UK assets. 

“Whilst it can be misleading to compare activity levels against previous quarters or years when there are (for example) outlier deals (like the Quanex/Tyman transaction), various deals perhaps not being reported or announced, and even the size of transactions differing across reporting, deal activity of overseas investors and buyers will likely continue.” 

The flow of domestic and overseas deals has experienced a dip due to macroeconomic factors such as interest rate uncertainty and significant political events such as the Budget and the US Presidential election.  

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However, this trend is expected to reverse, with several transactions likely to conclude before the year’s end. 

The UK’s stable regulatory and legal framework, favourable tax regime, and commonality of language with certain jurisdictions remain attractive to foreign buyers and investors, added James Klein. 

He further mentioned that the country’s emphasis on sectors such as fintech, technology, life sciences, and renewable energy has made these industries appealing targets for investment.  

UK companies are also increasingly seeking strategic partnerships overseas, particularly in the US, which could lead to further deal activity. 

The ONS data also showed that outward M&A deals, where UK companies acquire businesses abroad, were valued at £4bn for the quarter, a decrease of £200m from the previous period.  

For many foreign companies, acquiring UK businesses offers strategic diversification, allowing them to spread risk and have access to new customer bases and revenue streams. 

James Klein added: “In my view the rise in overseas investment is set to continue into next year and will undoubtedly increase, but I would expect UK M&A activity to pick up at the same time now that the Budget is out the way.”