Mergers & Acquisitions following the General Election

The dust is finally settling on the post-election period. The build up to the election was marked by low levels of activity prompted by uncertainty for investors, so recent ONS statistics delivering the news that Q1 of 2015 had historically low-levels of M&A activity in the UK should come as no surprise. As the Conservative party has secured its first majority for over two decades and is poised to deliver their first budget next month on the 8th July, Benchmark International reviews the press to see what business publications are saying about UK M&A activity in light of the Tory victory.

The Short Term View

City A.M. has covered the appointment of Sajid Javid to secretary of state for Business, Innovation and Skills, suggesting it will increase the attractiveness of the UK for international investors, particularly the US: “A top US investment banker in London was more enthusiastic. “If you are trying to persuade people in the US to do a deal in the UK, having Cable there would make people nervous,” he said. “The Tories are seen wanting to attract inward investment, and that makes it easier for bankers to go to investors and tell the story.””

Over at the Evening Standard, the paper’s financial editor and economist, Anthony Hilton, stated that uncertainty over the UK referendum on membership of the European Union may dissuade investment in the short-term until the UK’s status is resolved. The potential Brexit scenario, coupled with speculation that the referendum may not happen until 2017, could challenge activity in the sectors in the UK and Europe.

As a result, the projections are mixed, but it is certainly clear that longer-term trends go beyond current political situation. These trends are prompted by global economic factors, such as the relative strength of currencies and the price of oil.

Longer-Term Trends

Deloitte’s M&A report for H1 2015 highlights the extent to which international deals within the UK and Europe are being powered by investment from US and Asia. Moreover, as the price of oil stabilises and the strength of the dollar continues, more mergers & acquisitions are predicted to increase. The company also argues that Chinese investors, following the record year of 2014 for outbound M&A, will seek to diversify investments into sectors such as TMT (Telecommunications, Media and Technology) and CB (consumer businesses).

Such an international focus is filtering down into the sectors. This analysis is certainly of a piece with HR Magazine’s sector focus on HCM (human capital management), which predicts that the sector’s M&A activity will continue to work towards pre-Crash levels through 2015, and for the sector see continued increases in international deals.

What Next for Business Owners?

As with any election results, financial markets and business owners react in a range of ways. The focus is truly on the international business stage and as UK looks to seek change within the EU, the future of M&A may be affected. Benchmark International has huge experience working worldwide in many markets to provide bespoke strategies for companies look to sell. To find out how Benchmark International can provide you with the right strategy for the future of your business, contact us today.

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