Economic and business uncertainty choking off deal-making
Corporate deal-making has slumped in the first three months of 2017 as overseas investment in UK firms tumbled to its lowest level for more than two years.
Official figures yesterday showed overseas firms completed 40 deals to buy or merge with UK firms worth £5.1 billion in the first quarter – a fraction of the £50.4bn seen a year earlier.
The Office for National Statistics (ONS) said the number of deals between UK firms also dropped sharply between January and March, almost halving to 48 from 93 a year earlier and down from 90 in the previous quarter.
There were just 26 acquisitions of foreign companies by UK firms, worth £1.9bn, which was the lowest value recorded for more than three years.
It comes amid Brexit uncertainty, which is seeing many companies put investment decisions on hold, and follows the pound’s slump since the EU referendum.
Rob Donaldson, head of corporate finance at RSM, the accountancy firm, said: “We’ve seen a slowdown in domes- tic M&A activity in the first quarter of the year which may reflect a sense of unease about the future of the UK economy and the uncertainty resulting from Brexit.
“Despite the fall in the pound which has led to some high profile attempts by foreign companies to snap up UK firms, domestic and overseas buyers are proceeding with caution.”