Our Partner & Head of Corporate Finance, Andy Parker, shares his thoughts
Theresa May has echoed a sentiment I often express as a corporate finance deal leader: “Until the whole deal is done, no deal is done”. Whilst there are pieces of a deal that don’t quite fit, that haven’t been fully negotiated, parties can, legitimately reassess parts that have been agreed because everything is inter-linked.
Brexit has many moving parts like an M&A deal: price, terms, legal niceties, several parties (I am glad I don’t deal with 27 others!) and loads of emotion!
At the weekend, there were hints that May has manoeuvred the chess pieces to allow the United Kingdom to have a trade deal with Europe like Canada, keep the whole of the UK in a customs relationship with the EU and no need to have a hard border in Ireland. All she has to do now is to get her party to agree and get it all through the House of Commons!
Uncertainty is the challenge for some
The uncertainty over Brexit has impacted on the UK economy with both the Office of Budget Responsibility and the Chancellor reducing growth forecasts for 2019 to the lowest level since the end of the Global Financial Crisis – 1.3%. Some businesses that we have met have found the uncertainty the biggest challenge. Decisions to invest in new facilities or recruitment have been delayed by some and others have been cautious over long-term contracts they have been willing to take on.
Corporate M&A remains strong
The one thing we have not seen tail off is corporate M&A. We continue to see investors from overseas, particularly North America, see the UK as an attractive place to buy. Brexit-driven devaluation of sterling makes UK assets look cheap and, whilst Brexit may have caused a low-growth economy, the UK is still the fifth biggest economy in the world and a country in which business and the rule of law are respected.
In the next few months, we may see decision making slow for some as they get nervous over the future but most entrepreneurial businesses will, in my view, accept the challenge, adapt their business models and make a success of the future – whatever Brexit throws at them.