UK M&A has refused to give in, despite a slowdown in the first half of 2008, according to a study by PKF Accountants.

The report showed that there were 363 transactions in the first quarter, slowing down to 305 in the second.

However, this still played a big part in Europe’s overall M&A activity. Over the whole of the first half, the 668 transactions accounted for some 26 per cent of all deals in Europe.

The mid-market also fared better in the first quarter, with 231 deals, dropping to 184 in the second quarter, partly due to changes in Capital Gains Tax rules speeding up sales prior to the April deadline.

Private equity accounted for nearly half of all deals during the period, with 164 buy-outs in the first six months of this year accounting for £14.3 billion, although this was less than the same period last year.

The food sector stood out above all other sectors with 24 transactions worth a combined £597 million, although £350 million of this was the Vion Group’s purchase of Grampian Foods.

“Deal making in the large cap and mid-market has definitely slowed compared with the heady heights of last year’s M&A boom, but the market remains active albeit increasingly challenging.” said Hugh Matthew-Jones, head of corporate finance at PKF.

He added: “There is no doubt that we have entered a buyers’ market, but I am optimistic that bidder and vendor expectations will adjust to revised valuations post credit crunch resulting in a pick up in deal flow in the final quarter of this year and early in 2009.”