January 5, 2017 UK companies attract overseas buyers
A Thomson Reuters report at the end of December 2016 highlighted the continuing attractiveness of UK companies to overseas buyers. According to the report the UK mergers and acquisitions market in 2016 was worth £142.5billion with just over 80% of this coming from overseas.
In terms of overall world M&A volume, the UK stands third behind the USA and China ; partly reflecting the perception of the UK as a global hub for business and partly (it has said) reflecting the value of the pound post-Brexit which has effectively resulted in UK businesses being more than 10% cheaper than before. However, whilst the Brexit vote may have pushed the M&A market up in the second half of the year, the overseas appetite for UK companies has been strong throughout recent times, delivering a 5 year M&A average of £69billion.
Whilst the UK marketplace is relatively open, international investors still need to ensure that they comply with the relevant company regulations and take the appropriate precautions when undertaking due diligence. An investor may be familiar with the legal and commercial due diligence framework within their own country, but can still be caught out by the different nuances of English law. Taking appropriate advice will help to avoid these pitfalls and ensure that the merger or acquisition process is completed smoothly and legally.
In order to help those looking to invest into the UK the government has set up a UK advisory network which is designed to provide access to “high quality and trusted professional support.” This support ranges from accountancy and legal advice to help with HR, communications property and logistics. Approved advisors within the network have to complete a robust application process.
Elemental CoSec is proud to be a member of the UK advisory network providing a comprehensive service including corporate and commercial legal services and accountancy services. We can also assist inward investors in carrying out appropriate due diligence as well as advising on the most appropriate share structure post completion.
Although 2017 comes with a degree of political uncertainty, internet searches indicate that analysts are generally expecting M&A activity in 2017 to remain strong. As the Department for International trade comments “the UK is the number one destination for foreign direct investment (FDI) in Europe” offering people skills, a simple and competitive tax system and a transparent regulatory system.
