3 min read
So long, and thanks for all the fish
Following Ursula von der Leyen’s announcement earlier today, some form of Brexit deal is looking more likely. Leaving the European Union is a political choice ultimately based on sovereignty, and of course ‘fish’ judging by newspaper headlines.
My headline is borrowed from the Douglas Adam’s book – just because I liked it! We are often asked about the impact of Brexit and what M&A post-Brexit will look like and the truth is, that apart from currency fluctuations, it has had very little impact.
Since 2016, sterling has maintained its value, and this means that companies in the UK are affordable. A trade deal in the short-term means that we have less disruption, which will aid M&A. A World Trade Organisation (WTO) deal will cause far greater disruption and M&A will probably slow as the UK economy takes longer to reset.
Ultimately, by far the biggest impact on M&A post-Brexit in the next decade will be how the UK tackles its mindset. Was the Brexit vote about borders and ‘little’ Britain, or do we choose to, or indeed act and believe that it is about Global UK plc? By this I mean a country that understands its great historical trading advantages, in language, legislation but also tech and business services in the Covid-accelerated virtual age.
The trends of automation, online, virtualisation and AI have accelerated and made businesses far more dynamic than ever before. Acquisitions help businesses reinvent their models against this dynamism.
Time to Scale-up
The western economies have been experiencing below average organic growth for a decade and slow growth makes acquisitions one of the few, fast ways to scale-up and bring in new people, skills and innovation. Cheap, superabundant money and low-interest rates, as we anticipate for the next ten years, further encourages acquisitions.
So, we could worry that Brexit will cause economic drag, and indeed it will be a bumpy ride, but with a boundless mindset of the opportunities, it could mean that the M&A doors remain wide open and may sit centre-stage in Britain.
Our forecast is that M&A post-Brexit will get busier, not less so, and this may already be in evidence with the UK accounting for more than 60% of M&A activity in Europe to date during 2020. So, thanks for all the fish, now we have to multiply them with a multiplier mindset – the fish, of course, being an analogy for business and M&A!
Avondale are EME business advisors. Through our management consultancy, we support growth and scaling up. Through our M&A and corporate work, we secure investment and finance for EME businesses, help people buy and sell companies and enhance shareholder value. We recognise ambitious owners who require ambitious, specialist advisors.