Mergers and acquisitions market hits zero

According to Mergermarket, a mergers and acquisitions (M&A) intelligence specialist, the volume of deals in the sector dropped to zero between June and August.

Taylor Wimpey’s £74m fire sale of Taylor Woodrow, its construction arm, to Vinci in September has been the sector’s only deal since May.

The slump followed a flurry of nine deals in April in the run-up to the deadline for changes to capital gains tax.

Partnerships and individuals now pay a flat rate of 18% on gains when they sell up, compared with a previous maximum of 10%.

Richard Kelly, construction partner at BDO Stoy Hayward, said: “The M&A market is driven by credit so in the absence of bank funding you can’t do deals. What you’ve also got is falling asset values so even those companies with cash are holding off until things stabilise.”

In the absence of funding, you can’t do deals. Even those with cash are holding back.

Richard Kelly, BDO Stoy Hayward

The figures relate to all transactions with a value of more than $5m (£2.9m) across the contracting, housebuilding, consultancy, architect and building supplies markets.

In the past year there has been a total of 42 deals, which was the same number as in the year to September 2007. But overall the deals were worth £1bn, which is dwarfed by a figure of £8.4bn over the preceding 12 months.

One M&A specialist said the market could be depressed for the next two years. He said: “I can’t see any major pick up over that time. There may be the odd opportunistic deal but construction companies have shut up shop because there is less building going on.”

Other deals in the past year include Balfour Beatty’s £45m purchase of Dean & Dyball in March and the £41m acquisition of Richardson Projects by Rok in April.