The firm advised on 10 deals, retaining the top spot from the previous period. DWF made a significant leap – from 21st to second place – advising on eight deals, while Pinsent Masons, Brodies, and Bellwether Green each advised on seven deals, ranking them joint third.

The first half of the year saw a decline in the volume and value of M&A in Scotland, echoing a downturn seen across the UK and global markets, according to the report. It noted a 25 per cent drop in deal volume, with 183 deals recorded compared to 247 in the first half of 2022. The value of these deals plummeted by 68 per cent to £4.6 billion from £14.4bn in the same period last year.

The first half of the year saw a decline in the volume and value of mergers and acquisitions in Scotland, echoing a downturn seen across the UK and global markets, according to the report. It noted a 25 per cent drop in deal volume, with 183 deals recorded compared to 247 in the first half of 2022.

The value of these deals plummeted by 68 per cent to £4.6bn from £14.4bn in the same period last year. While deals at the lower end of the market proved more resilient, decreasing by approximately 20 per cent in volume and value, mid-market and large cap deals each fell by 37 per cent in volume, and mega deals by 60 per cent.

The report states: “Valuations at the higher end of the market declined more markedly, with mega deals struggling to reach the £3bn mark in comparison to just over £10bn last year. As deals become more difficult to complete in the current environment, the variance between small deals and those in the mid-market and above may become more distinct.”

The bulk of activity comprised domestic transactions, with outbound investment reaching as far as Australia, India, and the USA. Nearly 10 per cent of deals involved overseas acquirers, predominantly from Europe and the USA. Scotland’s deal activity represented 6.4 per cent of the UK’s total by volume, and 6.8 per cent by value.

Two notable mega deals were recorded in the second quarter. Spanish energy group Repsol acquired the 49 per cent stake held by its Chinese joint venture partner, Sinopec, in Aberdeen-headquartered Repsol Sinopec Resources, for £1.7bn, ending an eight-year dispute over the price paid by Sinopec’s subsidiary in 2015. Additionally, HM Treasury sold £1.26bn of shares back to NatWest via a directed buy-back, reducing the government’s stake to 38.6 per cent from a peak of 84 per cent, edging NatWest closer to full private ownership. Other significant transactions included the £596m acquisition of Motherwell’s MB Aerospace by US-based Barnes Group, and NatWest’s £144m acquisition of an 85 per cent stake in pensions fintech Cushon Group.

Although the overall picture is one of decline, the professional services sector saw a near 13 per cent rise in deal volume, with 61 deals in 2023 compared to 54 last year. This increase was largely attributed to a series of deals by Glasgow-based RSK Environment, part of the RSK Group. Conversely, the manufacturing sector was particularly hard-hit, with deal volume down by 45 per cent, although deal value rose by 15 per cent from £2bn to £2.3bn.

Jane Turner, research manager, Experian MarketIQ, said: “Amid a global slowdown, we’ve seen a marked decline in deal activity in the UK in the first half of 2023 as companies take stock of a rapidly changing market. Where deals have taken place, they’ve tended to be at the smaller end of the value range and private equity houses and overseas corporates – two major factors in driving the M&A boom postpandemic – have significantly scaled back their investments in the UK so far this year.

“However, it’s not all doom and gloom, and we’ve identified some sector specific growth this year, along with well-capitalised investors taking advantage of lowered valuations in some areas. The UK M&A market has exhibited great resilience and adaptability in spades in recent years and we see the potential for an upswing in volume as we move further into the second half of the year, once stability is restored and uncertainty subsides.”