On June 23, 2016, Britain voted to leave the European Union. Financial analysts throughout the globe are bracing themselves for the potentially wide ranging ramifications of the Brexit referendum, many calling Brexit one of the most extraordinary financial events in history. As stated in our last post regarding this subject, Britain's exit is creating a further drag on mergers and acquisitions. KPMG has noted that six (6) M&A deals that the firm was working on have been put on hold. Moreover, inbound deals into Britain have dropped by more than 50% since the first quarter, amounting to a bleak $13.1 Billion (www.cnbc.com). However, despite this short-term wobble in deal-making, there is some indication that M&A activity will pick up. The British pound has dipped to a 31-year low, causing some to speculate whether British companies will become prey to foreign investor (www.guardian.com). Also, Lloyds has just appointed a new senior executive to head its mergers and acquisitions strategy and aggressively pursue deals (news.sky.com/lloyds-names-deals-boss-despite-brexit-effect). Early indications post-Brexit suggest a varied approach to M&A opportunities in the immediate future. Time will tell but rest assured, we will be monitoring closely the fallout of Brexit.
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The author wishes to acknowledge the assistance of Fahad Diwan, Summer Student, in the preparation of this blog post.
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