No-deal Brexit 'could halve number of business deals'
The number of major business deals in the UK could be more than halved in the event of a no-deal Brexit, a law firm has said.
Figures released in the fourth edition of Baker McKenzie's Global Transactions Forecast, issued with Oxford Economics, indicate that a no-deal scenario would see merger and acquisitions (M&As) activity drop from 2,338 deals in 2018 to 1,041 in 2019. Values would also decline by 64% next year.
The UK initial public offerings (IPOs) values are also forecast to plummet by 60% next year in the event of a no-deal.
Throughout 2018, the UK has seen a rise in M&A value, which is expected to reach £169.5bn by the end of the year - a 56% increase on last year's £108.2bn. There has also been a 20% increase this year in the value of inbound deals to almost £104m.
If the UK proceeds with its exit deal, Baker McKenzie has predicted a fall in M&A value to around £113bn in 2019, declining further to £108bn in 2020.
Tim Gee, M&A partner at Baker McKenzie, said: "A no-deal Brexit environment will result in a notable decline in M&A over the next period, before confidence reasserts itself. If a change in government happens, however, this will be the biggest downside risk to activity and the negative impact on M&A will be extended."
In the Republic, deal activity could reach £9bn in 2019, assuming a no-deal Brexit is averted. However, M&As and IPO values could fall by 40% in a no-deal Brexit scenario. Despite Ireland's economic growth being strong in 2017 and reaching £3.9bn and rising to £8.5bn in 2018, deal-making was not as strong as during 2015 and 2016, when it reached £46.2bn and £11.9bn respectively.
The forecast predicts M&A value for 2019 to reach £8.6bn before falling to £5bn in 2020.
After a year of no listings in 2018, Baker McKenzie predicts IPO value of £260.8m in 2019 and £72.2m in 2020.