The UK's share of the global M&A market is at a record low ahead of EU vote

 
William Turvill
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British Expats And Germans Discuss Brexit
The UK will vote on whether to leave the EU on 23 June (Source: Getty)

The UK's share of the global mergers and acquisitions (M&A) market is at a record low ahead of the EU referendum.

Deals targeting UK companies have been valued at $57.6bn (£39.4bn) by Thomson Reuters, four per cent of overall worldwide M&A.

This is the lowest percentage since 1980, when Thomson Reuters’ records began. It is also the lowest year-to-date period since 2013.

Read more: M&A activity into the UK fell by 42 per cent at the start of the year

Inbound cross-border M&A in the UK totals $43.8bn so far in 2016, down 74 per cent year-on-year.

Several reports have linked a slow start to the year for M&A in the UK to this week’s EU referendum.

Last week, a report from Merrill Corporation and M&A Advisor revealed more than 69 per cent of 600 M&A, private equity and high-yield investment experts said they felt referendum uncertainty is affecting activity.

David Fergusson, president and co-chief executive of M&A Advisor, said: “It is our conclusion that a vote for Brexit is considered to be a major risk to M&A, [private equity and high-yield] markets. The range of implications, we believe, will be a significant agenda item for all organisations involved in these areas of business, well beyond 23 June 2016 and into an uncertain future spanning several years.”

Read more: M&A on "hiatus" but will recover however EU vote goes, says 3i chief exec

Others have been less certain of the impact of the referendum. Writing for City A.M. last month, Tim Gee and Nick O’Donnell of law firm Baker & McKenzie suggested the EU vote was being used as a “scapegoat” to explain falling activity.

“When it comes to M&A, while UK deal numbers have certainly dropped, the argument that this is due to the looming referendum doesn’t bear scrutiny,” they said.

“Based on our own experience, general macroeconomic concerns such as the state of China’s economy and declining commodities prices have a greater impact on M&A deals than individual political events.”

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