South: What does Brexit mean for mergers and acquisitions?

Recent Thomson Reuters figures revealed that merger and acquisition volumes in Britain collapsed by more than 70% ahead of the Brexit vote on 23 June 2016, reported Jonathan Williamson, partner at Blandy & Blandy LLP.

He said: "M&A activity is always very confidence-driven and Britain’s vote to leave the EU added to the list of uncertainties alongside US elections and interest rate risks. Uncertainty tends to drive away deals. Some buyers will naturally want to know what the new ‘relationship' with the EU might look like before buying in the UK.

"Certainly UK companies may be cheaper to acquire right now and many of our overseas investors believe that 2016 could be seen as the year to invest into the UK, whether that be in property or by way of corporate acquisition. The outlook will undoubtedly remain volatile until the deal between Britain and the EU has been struck and Europe as a whole plots its way through extremely turbulent political and financial waters.

"It is highly unlikely that UK businesses will not have access to the EU and indeed a good majority of smaller to medium-size UK businesses are not wholly dependent on European trading in any event.

"A lot of effort has gone in over recent years to build the UK’s reputation as a hugely attractive venue for entrepreneurship in general. Venture Capital Trusts and the Enterprise Investment Scheme have been highly valuable in helping to raise capital for start-ups and fast-growing companies which fuel the M&A market from the bottom up. These were also schemes that were somewhat restricted by EU State Aid rules. In the event that the use and effectiveness of these schemes and others, is maintained and actively encouraged, the UK’s global reputation as the best place to start a new business and raise capital to help it grow will be enhanced.

"One thing remains true however and that is that many companies depend on M&A to sustain and increase growth. If there are good acquisition opportunities in the market they will be taken. The fundamentals of the UK economy are sound. This means that there is no reason why UK businesses should not continue to flourish and therefore provide a very successful M&A marketplace.