Post-Brexit uncertainties are limiting global appetite for merger and acquisition (M&A) deals, which will revive once the UK clarifies when and how it will negotiate an end to its membership of the European Union (EU), according to a survey of dealmakers by Intralinks.
The enterprise platform and technology provider canvassed opinion from 1,001 M&A professionals around the world and found that 70% believe the number of deals will remain subdued until Brexit worries subside. Two in three cent believe that the UK leaving the EU will have a negative effect on global deal volumes for the second half of 2016.
“M&A levels are very sensitive to any uncertainty in the market,” said Philip Whitchelo, vice president of strategy and product marketing at Intralinks. “Unprecedented political upheaval in the UK is a cause for concern for dealmakers at the moment.” However, the survey was conducted in early July before Japan’s SoftBank agreed a £24.3bn takeover deal for UK chip maker Arm Holdings.
“It’s interesting to see the survey dispel rumours suggesting UK dealmakers are likely to be relocated to other financial centres in the EU, like Frankfurt or Paris,” added Whitchelo. “If we see more political stability as time goes on, the impact to dealmakers may not be as cataclysmic as originally anticipated.”
M&A activity in Europe has already slowed from the high levels of the past two years, according to data from media group Mergermarket. The first half of 2016 saw 3,110 deals worth US$342.8bn, the lowest H1 deal value and count since 2013 when 2,784 deals worth US$335.1bn were completed.
The decline was even more marked in Q2, with total deal value of US$160.9bn, the lowest figure since 2010 ($114.9bn) and a 38% reduction in value from H1 2015. The UK suffered more than other countries in H1 2016, with only 638 deals worth $58.2bn; the lowest deal value since 2010, which saw US$56.3bn from 504 deals.
The Intralinks survey found that 82% of UK dealmakers expect the Brexit vote to have a negative economic impact on Britain, while 66% of those surveyed across the world expect there to be a decrease in demand for UK assets over the next six months.
Far and away, the largest financial market on the planet is the foreign exchange currencies market, where on average individuals and organisations trade more than $5 trillion daily. In the FX world, the ability to master the market isn't considered a luxury for treasury officers–it's a necessity.
Using data for predictive analytics is the future of banking success, argued Jean-Laurent Bonnafé, CEO of BNP Paribas, in his session on how the bank is reinventing its approach to innovate with and for corporates.
The EU and US’ shift in accounting standards may bring balance sheet losses and increase credit risk, according to James Elder, director of risk services at Standard & Poor’s (S&P) Global.
Sibos 2017 day two highlights: Brexit and banking, and why ‘data is the new oil’ in financial services
How nation first politics can impact global financial organisations It’s clear that data and regulation are the two key topics that are ... read more