Peel Hunt warned there was a ‘wave of demand’ from private equity and foreign buyers looking to buy up small and mid-cap UK stocks.
Up to a third of firms on London’s junior stock market are vulnerable to a takeover next year as the City is set for a “major and sustained” deluge of swoops on UK stocks, an investment bank has warned.
A report by Peel Hunt on the UK takeover outlook, titled Barbarians At The Gate, said there was a “wave of demand” as private and foreign buyers line up to snap up UK stocks.
It predicts that up to a third of small and mid-cap firms listed on Aim are “potentially vulnerable to acquisition” in 2025 thanks in part to depressed valuations.
Michael Nicholson, head of advisory, and mergers and acquisitions, at Peel Hunt, said in the report: “Absent a change of events, it seems certain that 2025 will bring a major and sustained flow of UK takeovers.”
He added: “We observe a wave of demand approaching the shores of the UK – with strategic and private equity buyers simultaneously active – and our coastal defences feel weaker than ever.”
The 2025 predictions come after 2024 saw a raft of major UK companies fall prey to foreign and private equity takeovers, including Royal Mail owner International Distribution Services (IDS), Darktrace and Britvic.
Mr Nicholson said: “Approaches to UK-listed companies are now coming at an increased rate with those that become public knowledge far outweighed by those that are yet to (or may never) see the light of day.
“We see this trend only accelerating in the New Year, absent an unexpected change in circumstances.
“Over 2024, one in 20 of all UK-listed companies have been put under offer publicly – the highest level we have observed in recent years.”
He said Aim company boards need to be prepared to defend themselves.
“Defence manuals are no longer an item to be left on the shelf, ready to grab if needed,” he said.
“They ought to be front of mind for all UK boards, accompanied by an action plan to stay tightly aligned with key shareholders and a robust, up-to-date
assessment of fair value, as well as a clear understanding of how to respond when the doorbell rings as, for many, it surely will.”