October 14, 2019

Brexit: Uncertainty and Opportunity in M&A

By Suzy Bibko, EMEA Content Marketing Manager, Merrill Corporation

Everyone seems to have a strong opinion on Brexit, be it positive or negative…or even ‘meh’ due to over-saturation of news and debate at this point. However, when it comes to how Brexit affects M&A, ‘uncertainty’ and ‘opportunity’ seem to be on the tips of everyone’s tongues. 

“Deal or no deal, there’s a lot more uncertainty to come,” begins Allen & Overy's recent report, M&A and the Brexit Effect. Or, as a recent Deloitte report, The Impact of Brexit on M&A Activity, puts it: “Brexit has created uncertainties and some M&A plans are being put on hold. But we think the post-Brexit tumult creates opportunities as well. In the coming months we expect there will be both threats to M&A dealmakers and unique opportunities for them.” 

But is this just a case of hedging your bets or making the best of the worst? After all, no one can predict the future, and taking a firm stance – ‘on paper’ – can be risky. So, we decided to see what people on the front lines had to say.

We recently had the chance to speak with several experts and practitioners about the impact of Brexit on M&A. And guess what? Uncertainty and opportunity were on the tips of their tongues, too. 

Fog and Clarity
Sriram Prakash, Global Lead for M&A Insight and Global Lead for Disruptive M&A at Deloitte, said that the biggest impact from Brexit has been a fog of uncertainty. Some clients are waiting and watching, rather than shunning the UK market. Others are taking advantage of opportunities that have been created by Brexit, both in the UK and abroad.

Dominique Maes, a partner at Baker McKenzie, noted that while the ultimate outcome is uncertain at this point, it has had an effect on both sides of the pond – with some aspects of businesses being moved from the UK, as well as some businesses increasing their UK footprint.

David Chmiel, Managing Director of geopolitical research and analysis firm Global Torchlight and former M&A attorney, said that while Brexit has brought uncertainty and challenges, deal activity has not ground to a halt. Opportunities still exist for strategic acquisition and companies still need to grow and develop, albeit with a stronger focus on risk analysis and due diligence, and extended timelines.

Wait and See
Whatever happens, the positivity must be a good thing – for the market, for the dealmakers, and for our general mindset in this turbulent time. But as always with the future, all we can do is wait and see.

Find out what David Chmiel has to say about Brexit, including its effect on due diligence and how dealmakers keep moving forward in such an uncertain environment.

Have you checked whether your data room or due diligence application is Brexit compliant?
Now is the time to find out.

Ready to Get Started?

You may also like:

Keep the deal moving - even on the move

With the Datasite mobile app, you always know where the deal’s at – wherever you are.

M&A Professional reviewing documents via data room
The ABCs of SPACs and de-SPAC’ed Entities

With the change in market conditions over the last year (increased inflation, interest rates etc.), there is concern that companies who went public via a SPAC in 2020 and 2021 will not be able to continue their business operations due to a lack of free cash flow or will face de-listing because their stock is not in compliance with the NYSE or NASDAQ requirements. These companies may need to explore alternative options, such as rescue capital raises, full company sale to a strategic, bankruptcy, and PE take-private options, etc.

M&A Professionals work on a data room
M&A and digital transformation: Opportunities and challenges in APAC

The pandemic saw a growth spurt in digital platforms. Will the tech sector be able to sustain investor interest in the face of challenging macroeconomic dynamics? Learn more about emerging digital transformation stories from APAC in our expert spotlight blog.

City Skyline