Acquisition activity suppressed by market uncertainties

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More than half of UK companies are said to be holding off mergers and acquisitions as market uncertainty causes a risk aversion. Chief amongst factors causing the uncertainty is Brexit and current risk appetite levels are the lowest since the financial crisis of 2008.

Over 80% of chief financial offers are expecting the business environment to deteriorate over the long terms as a result of Brexit, the highest percentage since the referendum in June 2016. The findings are announced in a report compiled by Deloitte in its quarterly survey of executives making spending decisions at the UK’s largest companies.

The survey took place between June 12 and 28 and it questioned chief financial officers and financial directors from UK listed companies, large private companies, and UK subsidiaries of large companies listed overseas.

Those surveyed also revealed that just 4% believed it was a good time to take on greater risk onto their balance sheets and 52% answered ‘no’ when asked if  acquisitions were a priority for their companies.

Perhaps worryingly for the job market, 62% suggested they thought recruitment would decrease over the next three years, the highest level since 2016.

It is clear that the events of the last three years have added to, rather than reduced, worries about the impact of Brexit. The hesitant mood at the top of the food chain will likely filter down to the small and medium businesses that are the life blood of our UK economy.

The news suggests it is more important than ever to take the right professional advice with regard to mergers and acquisitions with the impact of Brexit continuing to remain unknown. With the withdrawal deadline of October fast approaching, it is more important than ever to consider options carefully.

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