A recent study published by Ernst & Young concludes that the UK remains Europe’s number one choice for investment in acquisitions – surely a vote of confidence in the resilience of our economy.
The findings come despite continuing Brexit uncertainties and a slower pace of economic growth. The report puts this down to the UK being a “powerhouse of intellectually-rich companies in a range of sectors”, citing consumer products, financial services, technology and industrials as particularly good examples.
The UK ranks 3rd globally, behind the United States and China as an investment destination, underpinning the attractiveness of the UK on a global stage, and high domestic M&A activity; on the latter topic the report suggests “doing deals is in the DNA of UK companies”.
This ranking follows a brief fall to 5th place about a year ago in the immediate aftermath of the EU referendum result, a downgrading that proved short-lived. It seems the abundance of technology, talent and IP is likely to ensure the UK remains a major player irrespective of Brexit concerns. Certainly, the international reach and customer base of many UK businesses makes UK-based assets attractive to overseas buyers, still more so since the reduction in Sterling created more favourable exchange rates.
Generally speaking, global M&A deal activity is expected to rise – 56% of companies responding to the survey intend to complete a least one acquisition over the next 12 months – a percentage that’s remained consistent over the last year. This evidences a recognition by businesses of the part acquisitions play in taking advantage of emerging trends and changes to boost long-term value and meet shareholder demands; demands that are unlikely to be satisfied by organic growth alone.
With regard to our own deal activity, Smith Cooper has experienced the UK’s global attractiveness as a deal target. We have already completed well over 20 deals this year, many with an international dimension; these include the sale of industrial sealant manufacturer Adshead Ratcliffe to a New York Stock Exchange listed group, and the sale by Kuwait-based Kout Food Group of its fried chicken restaurant business.
If you would like any further information about the current M&A market, please feel free to get in touch with one of our Corporate Finance experts.