Thursday 17 June 2021 6:06 pm

UK remains an attractive M&A destination, climbing slightly despite Brexit

Britain has remained an attractive destination for inbound investment despite leaving the European Union, according to the latest global rankings for M&A attractiveness.

The UK climbed two places to the fifth most attractive place in the world for M&A activity in 2020, in the latest global Mergers and Acquisitions Attractiveness Index Score (MAAIS) by City of London Business School.

The index incorporates deals data with regional factors such as the technological landscape, ESG, the regulatory and political environment and the economy, to work out where investment activity is concentrated.

Despite coming in fifth, the UK recorded the third highest volume of deal activity and deal value behind the US and China, which showed the “resilience in its financial infrastructure to continue attracting overseas investment,” the researchers said.

Although an improvement on 2019, the UK’s current ranking is a demotion of four places from 2015, before the Brexit vote took place.

The index, which scores and ranks countries each year on their ability to attract and maintain domestic and inbound M&A activity, crowned the US as the most attractive M&A destination, followed by Singapore in second place.

In Europe, Germany and the Netherlands ranked ahead of the UK in third and fourth place respectively.

Italy fared far worse than the UK in the last five years, falling 23 places in the rankings to outside the world’s top 30, while China slid down 20 places. The researchers highlighted ESG and regulatory factors as reasons for Italy and China’s respective demotions.

North America ranked as the most attractive region for M&A, with Western Europe and Oceania taking second and third place.

Dr Naaguesh Appadu, lead co-author of the report, cautioned that the UK’s healthy M&A ranking for 2020 could in part be attributable to where it stood in the Brexit negotiations.

“Of course, this could also suggest an urgency to finalise deals before Britain’s Brexit transition phase expired at the end of the year with a no-deal scenario still on the table at that point – which could have made such investments more problematic,” he said.

“The uncertainty around the Brexit vote and subsequent negotiations have undoubtedly impacted [the UK’s] gradual decline, and it will be interesting to continue monitoring this in conjunction with the impact of coronavirus,” Appadu added.