How M&A buyers are taking a “watch and wait” approach to UK acquisitions ahead of EU referendum
Another day, another M&A report, another conclusion relating to the EU referendum.
Buyers are taking a “watch and wait” approach to UK acquisitions before the EU referendum next month, according to Deloitte.
Global M&A activity has slumped so far in 2016 following a record-breaking 2015, in which more than $5 trillion worth of deals were announced.
Read more: Why Brexit vote should not be used as scapegoat for falling M&A activity
A new report from Deloitte suggests that the UK has suffered a greater slowdown than other EU countries. The referendum is playing a part, the report suggests, but “is not the only factor at play”.
Deloitte said there is “no definite answer” on what the effect of a Brexit would be. But if there is a vote to leave, the current “period of uncertainty and corporate indecision may well prolong”, it said.
The report found that between the first quarter of 2015 and the first quarter of 2016, the number of UK-targeted deals fell 10 per cent to 222 and the total value across those transactions fell 42 per cent to $30bn.
Over the same period, other EU nations saw M&A targeted at them increase by four per cent to 384, while the total value of those deals more than doubled to $73.5bn.
Read more: Why 2016 is already the worst year for collapsed deals in the US
The UK also performed worse than the EU in general in terms of domestic and outbound M&A.
Iain Macmillan, global head of M&A at Deloitte, told Morning Wire: “The slowdown in the UK is not wholly surprising as buyers watch and wait, however uncertainty over EU membership is not the only factor at play.
“We have seen a slowdown in economic growth in the UK and elsewhere, while mainland Europe has relatively held up to expectations.
“The markets have also had a very jittery start to the year here. In essence, the perfect storm that created the boom in M&A here has, of late, been operating in reverse.”