Crash of 2008 'long gone'

UK firms set for overseas acquisition spree

Michael TimminsBritish companies are planning an overseas acquisition spree, with the US, China and Europe in their sights, according to EY’s 13th Global Capital Confidence Barometer.

Four out of five UK executives (83%) expect global deal activity to increase, buoyed by their confidence in key financial indicators improving – corporate earnings (70%) equity valuations (54%) short-term market stability (71%) and credit availability (73%).

Encouragingly for UK business, the Barometer reveals that 42% of UK executives are more aggressively focusing on growth than their global counterparts (33%) but at the same time are acutely aware of the risks from increased volatility and slowing emerging market growth.

UK respondents see increased volatility in commodities and currencies (33%) and slowing growth in key emerging markets (28%) as greatest risk to their businesses and this is driving their acquisition strategy towards the developed economies of North America and Europe.

The US was the top destination for UK corporate investors, followed by China which remains attractive to UK investors, while 41% of respondents reported that their appetite for acquisitions across the Eurozone has improved.

Scotland bolder in business

Mike Timmins (pictured), Transaction Advisory Services, executive director at EY in Scotland, said the pipeline for deals remains strong.

“In part this can be attributed to the election result which avoided uncertainty of a hung parliament but this is also due to a boost in confidence.

“Business leaders are making bolder decisions. The crash of 2008 is long gone and can’t be used as an excuse for being overly cautious anymore. There is still turmoil in the market, such as geo-political factors or changes to foreign markets and economies which will continue to fluctuate, but people are starting to realise there will always be uncertainty of some kind. Business leaders are side-stepping hesitation and committing to pushing their companies forward.”

Sector convergence – a clear blurring of industry lines
EY’s latest Barometer indicates that technology and changing consumer preferences are disrupting business models and blurring sector boundaries. The need to invest to keep pace with new entrants and developments is increasing levels of deal-making – with executives focusing on M&A to secure innovation, competitive advantage and market share for the foreseeable future.

The sectors with the highest level of M&A intent are consumer products and retail (70%), financial services (67%), mining and metals (67%) and diversified industrial products (60%).

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