Early-stage M&A activity in the UK expected to drop over Brexit concerns

Fewer M&A deals are expected due to concerns over Brexit. Picture: Sonya Duncan Copyright: Archant 2016

Fewer M&A deals are expected due to concerns over Brexit. Picture: Sonya Duncan Copyright: Archant 2016


The number of UK deals in the offing has taken a tumble after Brexit concerns slammed the brakes on mergers and acquisitions (M&A) activity, a report has found.

UK early-stage M&A is expected to drop 2% in the second quarter of this year in response to the government’s plans to trigger Article 50 by the end of March and begin Britain’s split from the European Union.

The study by Intralinks said the UK market “remained volatile” and had failed to maintain momentum after pushing higher in the third quarter of 2016.

The deal flow predictor survey pinpoints early-stage M&A activity as transactions that are in the preparation or due diligence stage and are around six months away from public announcement.

Matt Porzio, Intralinks vice president of strategy and product marketing, said global growth of early-stage M&A had remained steady, but could face headwinds in the coming months.

“The forces that have been powering M&A activity over the past three years - namely a global environment of low inflation, below-trend economic growth and ultra-low interest rates - remain in place today.

“However, storm clouds may be gathering which could affect global M&A activity over the next few years: the UK government’s exit negotiations with the European Union (EU) and the as-yet undefined relationship with its trading partners post-Brexit, the impact of Donald Trump’s presidency and his administration’s policy changes, the rise of nationalism, anti-globalisation and protectionism.”

The survey said early-stage activity looks set to grow 7% worldwide in the second quarter of 2017, pointing towards a record first half of the year.

It said early-stage activity had expanded by 9% across Europe, the Middle East and Africa over the period, with France lifting 28%, Spain jumping 24% and Germany and Italy climbing 17% and 15% respectively.

Mr Porzio said the sectors expected to show the strongest global growth over the period are healthcare, materials and financials, with industrials, energy and power, and consumer and retail seeing the biggest falls.

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