M&A activity set to rise as UK firms look overseas

M&A activity will rise in 2012 as UK businesses get an appetite for overseas acquisitions. The number of firms looking to buy or merge with an overseas competitor has more than doubled since the start of the year according to research from Royal Bank of Scotland.

Meanwhile more than half of mid- to large-sized UK companies are now actively considering acquiring a smaller business next year, up from a third earlier this year.

Tim Boag, managing director, structured finance, RBS Corporate & Institutional Banking, said: "Tough times can create opportunities for mergers and acquisitions. Mid-corporates have generally strengthened their balance sheets over the last few years and this reflects a more bullish mood compared to earlier this year."

Some acquisition opportunities are being created by problems at rivals. Last night, for instance, GO Outdoors – which already has 36 out-of-town sites – confirmed it is in contact with KPMG in relation to indicative offers for parts of Blacks, the collapsed camping and outdoors business. Go opened three new stores on Saturday in Birmingham, Lakeside, and Plymouth.

Meanwhile rival firm Mountain Warehouse is also believed to be circling Blacks with an eye to making a bid for part of the business.

Despite the current economic uncertainties, many firms actually remain bullish on future prospects. According to the RBS survey, 55 per cent of directors and executives at UK firms with a turnover of over £25m are confident that their company's revenue will grow in 2012. "Whether this feedback translates into actual deals in 2012 remains to be seen as the economic outlook is uncertain," said Mr Boag.