Deals to take firms private at three-year high

The number of UK-listed companies being taken private is at a three-year high as improving market conditions provides certainty for dealmakers.
The rate of public companies exiting the stock market has returned to the levels last seen when the exit from economic lockdown spurred on dealmaking in 2021, according to a report from Deutsche Numis, the broker.
The City has seen an uplift in so-called public-to-private deals this year with Darktrace, Hargreaves Lansdown, Wincanton, Spirent Communications and others all targeted by rival corporates and private equity firms.
The mergers and acquisitions market suffered from a long period of inactivity owing to interest rate rises from central banks driving up the cost of borrowing, but it has been recovering this year because of improving financing conditions and confidence among buyers, according to a survey of 200 individuals in private equity by Deutsche Numis.
It found that 26 per cent of respondents regard UK public companies as the main focus for the pipeline of future deals compared with 14 per cent in 2023.
The research revealed the “pivot” in focus from private markets to public equities was underpinnedby concerns that private companies are “more overvalued” than their listed peers. The survey found that 61 per cent of respondents felt private assets were either overvalued or significantly overvalued.
Stuart Ord, co-head of UK mergers and acquisitions at Deutsche Numis, said public markets were attractive to investors because listed assets appeared to be priced more fairly.
He added: “There’s been a dearth of private transactions recently, so it is entirely logical that public markets are more fairly valued, as they are a market that is trading every single day.
“As the situation in the macroeconomic environment improves and the outlook and confidence grows — and perhaps the base rate falls continue to happen — you’ll start to see more private transactions, and people competing and starting to get the right price.”