Brexit hits UK M&A intentions - EY

Despite 2018 being on track to become a near-record year for the number of global mergers and acquisitions (M&A), intentions amongst UK companies to pursue deals in the next twelve months has hit a four year low, according to latest EY research.

The results of the nineteenth edition of EY’s biannual Capital Confidence Barometer (CCB19) survey of more than 2,600 executives across 45 countries, shows that UK respondents remain confident in the economic outlook.

But this sentiment does not now appeat to translate into M&A activity in the next 12 months, with 45 per cent of executives saying they will actively pursue deals, which is down from the 65 per cent of respondents in July.

Despite the sharp drop, this figure brings the UK in line with global M&A expectations (46 per cent).

At the same time, the UK has climbed to second place (from fifth) on the global M&A destination list. According to CCB19, US (1), Canada (3), Germany (4), and France (5) complete the list of top five investment destinations of choice amongst global executives.

Operating in an uncertain environment has led UK business to opt for safer routes to allocate their capital. EY CCB18 found that UK respondents are focusing most of their resources and attention on ‘investment in existing operations’ (30 per cent) and ‘improving working capital management’ (29 per cent) ahead of ‘acquisitions, JV’s and alliances’ (7 per cent). Increasing regulatory intervention and protectionism (47 per cent) are creating the strongest deal headwinds.