Brexit hits the UK’s M&A appeal

Jigsaw showing Europe without the UK pieces


UK: Missing from the M&A map

Accountancy firm EY polled more than 1,700 company executives from across 45 countries and found about 57% of respondents expect to be on the hunt for deals over the next 12 months, the second-highest percentage in the seven years EY has run the survey.

But for the first time since the firm began tracking sentiment, the UK has fallen out of the top five investment destinations of choice for companies, according to the survey, published on October 17. It ranked seventh, behind Japan, France, Canada, Germany, China and the US at number one.

In a statement published alongside the report, Steve Krouskos, EY’s global vice chair of transaction advisory services, said: “Brexit is a prominent example of the rise of geopolitical changes that are adding complexity to cross-border investments. In the longer term, we would expect the UK to bounce back as a top M&A destination of choice but the short-term uncertainty is giving investors pause for thought.”

The survey found that smaller deals will drive the market. More than half of respondents expected their own deals to be worth between $ 250 million and $ 1 billion.

Companies are also looking to use takeovers to enter new areas of business. These “industrial mash-ups”, as EY calls them, allow acquirers to “make deeper inroads into adjacent or unrelated industries”, whether to combat new competitive pressures, access new customers or extend product offerings.

Krouskos said: “Turbo-charged technological advances and an unsettled geopolitical landscape have changed the M&A field of play forever. In this disruptive environment, the quickest route to innovation and growth is MA&A – mergers, acquisitions and alliances.”

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