Brexit uncertainty and “sentiment of caution” cause North West deal slowdown

Uncertainties over the future of Britain’s membership in the European Union have caused the number of overseas deals in the North West to fall during Q1 2015.

Data revealed in the latest Cross Border Deals Radar, from professional services firm Deloitte, showed that during the first three months of 2016 just 12 deals were completed, in comparison to 16 during the same period in 2015.

The total value of the transactions was also lower, with North West firms attracting £277.2m in overseas deals between January and March. This figure is down from £586.1m during Q1 2015, a year-on-year drop of more than £308m.

Of the 13 deals completed in this year’s first quarter, just three involved EU-based firms. According to Deloitte, this highlights a reluctance to complete transactions on both sides of the English Channel, ahead of the EU referendum this June.

Seven of the deals were completed from the Americas, while three originated from the Far East.

Conversely, the value of outbound deals involving North West firms increased, rising from £106.1m to £144.8m, although the figure is largely due to the Northwich-based Dechra Pharmaceuticals’ £140.6m acquisition of US developer Putney in March.

Deliotte’s North West director, Oliver Tebbutt, said: “Though we have seen some standout deals for the North West in the last three months, it comes as little surprise that the overall number of transactions has seen a dip.

“With uncertainty surrounding the EU referendum, the sentiment is one of caution, with businesses naturally tentative when it comes to making potentially game-changing decisions.”

He continued: “However, the fact that deals have continued to get away underlines the strength of businesses in the North West, and given current activity levels, I am confident that 2016 will deliver a healthy level of M&A activity in line with the strong performance of the region’s M&A market over the last two years.”

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