UK ranked as the top investment destination in Europe by M&A Attractiveness Index Score

The United Kingdom remains the top target in Europe for inbound and domestic investment, according to the latest M&A Attractiveness Index Score published by the Mergers and Acquisitions Research Centre (MARC) at Bayes Business School (formerly Cass).

Now in its second decade, the latest annual ranking compared deal activity and attractiveness to investors in 148 countries worldwide, and the UK also placed second in the world just behind the US and ahead of Singapore.

Produced by Dr Naaguesh Appadu, Senior Research Fellow at Bayes, the report also provides additional analysis into the opportunities and challenges facing countries, including the clear emergence of environmental, social and governance (ESG) considerations from investors when completing a deal and the importance of strong national infrastructure.

Key findings from the report include:

• The United Kingdom has risen one place year-on-year to 2^nd globally behind the United States (1^st) and ahead of Singapore (3^rd). As a result, the UK remains the most attractive European country for inbound and domestic investment for a second consecutive year.
• Canada (4^th), South Korea (5^th), Germany (6^th), France (7^th), Netherlands (8^th), Norway (9^th) and Spain (10^th) make up the rest of the top 10.
• Within the top 50, Italy (up 12 places to 21^st) improved the most over the year, followed closely by Brazil and Bulgaria (up 11 places to 39^th and 49^th, respectively) and then Japan and Mexico (up eight places to 11^th and 50^th, respectively). The United Arab Emirates also moved up five places to 19^th.
• Improvements over the five-year period show Malaysia and Greece leading the pack with a gain of 13 places each followed by Japan (up 10 places to 11^th) and Sweden (up nine places to 17^th). The countries that have lost the most ground in the top 50 over the five-year period are Mexico (down 14 places to 50^th), Israel (down 13 places to 32^nd) and, not surprisingly, Russia (down 11 places to 47^th).
• ESG is seen as the leading market opportunity for Canada (4^th) and Norway (9^th), while regulatory and political aspects are the key factors for both Singapore (3^rd) and Netherlands (8^th). For South Korea (5^th), technology is the key factor group that has kept it in the top five.
• Notably, the leading market challenges for six of the top ten countries are of a socio-economic nature largely due to the impact of the pandemic.

Dr Appadu said:

“The M&A Attractiveness Index Score examines where investment activity is most heavily focused, and predicts regional trends. Since our first report in 2009, we have evolved and improved the methodology to create greater accuracy in line with changing market forces across the globe.

“The rise in protectionism around the world and the invasion of Ukraine by Russia have all led to economic instability in developed markets. However, these events have also encouraged the rapid growth of domestic and inter-regional M&A activity in many countries within these markets, along with cross-border deals between developed and emerging countries.

“Our latest report shows that the UK is leading the European region, as it is ranked second in the global country list followed by Germany, France, Netherlands, Norway and Spain in sixth, seventh, eighth, ninth and tenth positions, respectively. For Asian countries, Singapore leads the region in third position of the global index followed by South Korea in fifth.

“For the UK, it is notable that it has retained this position for a second year despite the issues associated with Brexit.”

Methodology

The Index is designed to evaluate the capacity of a given country to attract and sustain M&A activity. It is a weighted average composite of 21 indicators that aggregate into six factor groups: Regulatory and Political, Economic and Financial, Technological, Socio-economic, Infrastructure and Assets, and Environmental, Social and Governance. In order to reach the final score for each country, 75 per cent is weighted to the index with the remaining 25 per cent weighted by that year’s domestic and in-bound cross-border M&A activity.