Brexit: Don’t panic, the deals are beginning to flow again
John-George Willis, head of the corporate department at law firm Tughans, on why the post-Brexit picture for merger and acquisition deals may not be as bleak as feared
In the wake of the momentous decision of the UK electorate to leave the European Union, there is no doubt that the period of uncertainty which followed the referendum on June 23 has led to a slowdown in transactional activity in Northern Ireland as the banks, their customers and professional advisers assess the implications of this new environment we currently find ourselves in.
Naturally enough there is a great deal of caution in proceeding with deals, particularly highly leveraged transactions where the ability to repay a loan taken out for the acquisition may be damaged if there is a downturn in our fragile economy, an economy which is only now beginning to recover from the recession of 2008. However, there are early signs of a return to normality.
Our view is that any reduction in the level of M&A activity has been only temporary in duration and that deals are beginning to flow again.
Within the last fortnight, we’ve helped Belfast-based M&M Contractors to buy Mascott Construction, the Belfast-based construction firm that went into administration earlier this month. Mascott has been a major player in construction in Northern Ireland over recent years and was notably the company responsible for building the MAC Theatre in Belfast’s Cathedral Quarter.
M&M Contractors, which specialises in power, telecoms, civil engineering and infrastructure, has purchased some of Mascott Construction Ltd’s assets and equipment. M&M chief executive Gareth Loye hopes to revive the company and keep the Mascott name alive and believes that acquiring Mascott’s assets and equipment will only enhance the service currently being offered by M&M.
Tughans was absolutely delighted to represent an up and coming company such as M&M Contractors in this transaction and looks forward to seeing it grow and develop the business further over the next few years.
Working to an extremely tight timeframe, this deal was actually done in just over four days, which is an impressive turnaround by anyone’s standards. Tughans had a dedicated team of five specialist solicitors working relentlessly to get the deal for M&M contractors.
It is pleasing to see local firms seizing these kinds of opportunities and having the courage to invest in the future, especially following the recent Brexit decision. M&M has now given itself a fantastic platform from which to build upon and which will allow it to develop its business.
The appetite to do deals in Northern Ireland is still here. We have also received instructions in recent days for the acquisition of a retail park just outside Belfast. Confidence is returning and we will all move on from the shock of Brexit.
The business community here knows that the negotiations between the UK and its EU partners to disentangle 43 years of ever-closer integration in the institutions of the EU are going to be very complicated, prolonged and potentially fractious. Although there may be some uncertainty ahead, now is not the time to panic.
The people of Northern Ireland are resilient and will face whatever comes their way, as will the business community, which has been through tough times before and will rally to overcome any new challenge. that it might encounter, including Brexit.
Businesses will quickly learn to go about their normal activity while all this is going on, be in no doubt about that.