Deal or No Deal: Brexit and M&A

27 November 2019

Brexit has been on the horizon for what seems like an eternity. Regardless of the outcome, which should be determined soon, when it comes to how it affects M&A there are two words on the tip of everybody’s tongue; ‘uncertainty’ and ‘opportunity’. Though seemingly conflicting in nature, it appears that this is an accurate representation of the current climate. There are some who seek to take advantage of the uncertainty with the aim of reaping greater rewards in the long run; and some who seek to avoid risk and preference inaction during uncertainty.

In the recent Deloitte report ‘The Impact of Brexit on M&A Activity’, this sentiment is shared. “Brexit has created uncertainties and some M&A plans are being put on hold. But we think the post-Brexit tumult creates opportunities as well. In the coming months we expect there will be both threats to M&A dealmakers and unique opportunities for them.”

Lexology recently reached out to some of the major players in the UK M&A market to see what impact Brexit uncertainty was having on their operations. Unsurprisingly, the same two words seem to be shared across key professionals active in the market.

‘Fog & Uncertainty’

Sriram Prakash, Global Lead for M&A Insight and Global Lead for Disruptive M&A at Deloitte regarded the past few years as a period of fog and uncertainty. Their observations have been that some clients, who would have been otherwise seeking opportunities, are taking a ‘wait and see’ approach. The good news coming from Sriram is that he noted clients were not shunning the UK market, but rather were not willing to engage in M&A activity when the UK’s future international economic relationships are still so unclear.

Dominique Maes, a partner at Baker & McKenzie, noted that although the outcome is still uncertain at this point, it has had an affect on both sides – with some activities of businesses being moved abroad, but others increasing in their UK footprint. David Chimel, Managing Director of geopolitical research and analysis firm Global Torchlight and former M&A attorney, said that while Brexit has brought challenges, the data does not show deal activity grinding to a halt. Opportunities still exist for strategic acquisition and many firms are willing to take risks in order to grow and develop their business, but a stronger focus has been placed on risk analysis, due diligence and timeline extensions.

Regardless of the eventual outcome of Brexit, it seems that the market has not at all lost faith in UK dealings at present or in the future. The inconvenience caused by repeated delays in a final agreement has caused firms to ‘wait and see’ longer than they have anticipated. However, the activity of the market under such turbulence seem reflects a generally positive outcome to post-Brexit UK.

We work with a number of the leading Corporate Finance and M&A firms in the UK and abroad. Interested in being a part of the industry leaders navigating the fog? Get in touch with our team and see where we can take your career!

 

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