U.K. Still Dealmakers’ Favorite Despite BrexitBy
U.K. is top investment destination in Europe, consultancy says
Global executives expect deals competition from private equity
If Brexit is bad for British business, global dealmakers aren’t paying attention. The U.K. is still their favorite place in Europe to invest, according to a survey by Ernst & Young LLP.
Business executives from around the world ranked Britain third behind the United States and China as the top investment destination, ahead of Germany and France, the New York-based consultancy said in its Global Capital Confidence Barometer report.
“Doing deals is in the DNA of U.K. companies,” said Steve Krouskos, EY’s global vice chair of transaction advisory services. “The U.K. is home to the most important assets sought by dealmakers -- technology, talent and intellectual property -- so it always has been and always will be a major player.”
While the U.K. briefly fell to fifth place in the same survey a year ago in the initial panic that followed the referendum to split from the European Union, it snapped back in part because the pound’s Brexit-induced slide made targets cheaper. The survey also suggests investors are taking tense Brexit negotiations and slowing economic growth in stride.
Apart from Brits, American and Australian buyers have been the most active on Britain’s M&A playing field, according to EY. Over the summer, Vantiv Inc. agreed to spend 8 billion pounds ($10 billion) buying e-commerce payments company Worldpay Group Plc and McCormick & Co. took over Reckitt Benckiser Group Plc’s food assets for $4.2 billion.
M&A activity worldwide will only get busier in the coming year, according to the consultancy, which surveyed almost 3,000 executives across 43 countries. Fifty-six percent of respondents said they are planning a deal within the next 12 months and more than half expect the greatest competition in M&As will come from private-equity firms.
“The resurgence of private equity could be the biggest M&A story over the next 12 months, and see corporates challenged much more aggressively for assets than during the past five years," Krouskos said. “Brexit creates some uncertainty, but fulfilling strategic growth needs rather than nationalism will drive deal sentiment.”