Brexit Impact on UK M&A

Oct 2018

As the deadline for the UK to leave the European Union edges ever closer, the M&A market has been outperforming expectations. According to the recent Mergermarket Trend Report, UK M&A transaction value in the first half of 2018 was 48% higher than the same period a year ago, at £109.7 billion.

As we discuss in a new article that originally appeared in The Times, there are a few factors for continued activity:

  • Interest from North American investors: With the pound trading at near all-time lows relative to many currencies, including the U.S. dollar, the UK offers the opportunity to invest in an attractive long-term market at a reasonable price.
  • Interest from Asian investors: While Asian investors are taking a balanced approach, they are not demonstrating any real concern about the post-Brexit environment. The tech sector continues to be a hot target, as there is a desire to enhance both knowledge, skills and market penetration.
  • Strong sector performance: Healthcare, TMT and industrials are performing well due to advanced preparation and scenario planning, the promise for a boost in domestic manufacturing, and technology disruption creating opportunities in adjacent industries like fintech.

Lincoln Perspective

Despite market uncertainty, pre-Brexit deal activity has been strong. As the UK inches toward the March 2019 withdrawal deadline, however, we anticipate a temporary period of readjustment where banks are likely to be conservative, leading to a reduction in M&A activity. While the longer-term outlook is positive, it’s vital that any business looking to sell starts the process early and targets the most appropriate potential buyers.

To read more on the outlook for UK M&A, read our full special report in The Times here.

Summary

  • Phil McCreanor, Head of Investment Banking for UK and Nordics, discussed how Brexit is impacting M&A activity in a recent Times article.

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