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Plotting a new course

The impact of Brexit on M&A activity

Following the EU referendum vote, the reaction from currency and stock markets was swift. It is clear that the vote for Brexit shook investor confidence. However, a period of uncertainty can also provide unique M&A opportunities. Indeed overall many conditions remain favourable for deals.

This report covers the aftermath of the EU referendum vote on M&A activity, and provides direction around how deal makers can preserve value in these turbulent times.

Key highlights

  • The UK M&A market activity had slowed prior to the EU referendum, although this was more pronounced on larger deals and private equity deals. In contrast, the corporate mid-market (£250m-£1bn) was and remains relatively robust with deal volumes comparable with H1 FY15.
  • M&A is a long term decision making process and we see many deal makers in a “wait and see mode”, approaching the post Brexit world in a rational and considered way. Furthermore, a snap poll conducted by Deloitte indicates far greater numbers are considering incremental M&A opportunities from Brexit than those looking away from UK as a target destination.
  • Brexit has resulted in some transaction processes taking longer as deal makers try to assess the new environment resulting in some additional work around Brexit implications by acquirers. Meanwhile, protecting value on potential divestments is a key action for vendors.
  • We have seen that once uncertainty dissipates, M&A activity tends to recover quickly. Deal makers are looking to politicians to deliver that certainty as soon as possible.
  • One thing is clear, dealmakers may be cautious, but they have not gone away. Deals are still getting done, and attractive, strategically important acquisitions are still demanding premium valuations. A time of high uncertainty and of volatility in markets can be an opportune one as well, and some maybe ready to pounce.
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