Investors say Britain is as attractive as it was before the EU referendum, according to research from Stephenson Harwood.
The law firm canvassed the views of 300 executives from mid-market businesses involved in deals ranging from $70m to $700m (£533m, €594m).
The resulting report, titled Deal Appeal, uncovers the attitudes of domestic and international investors towards the UK as a deal-making destination.
Of those surveyed, 88% said that the UK remains at least as attractive as it was in spring 2016, a striking departure from the business response to Brexit, which has been almost universally downbeat.
Standout factors include the quality of technology and intellectual property, macro-economic stability and a skilled labour force.
Indeed, 88% of the investors surveyed have completed at least one deal in the UK over the past two years. Of them, only 1% said they were not planning a UK deal in the next two years because of Brexit ambivalence.
Encouraging landscape
“This report reflects our own experiences and confirms investor confidence in the market,” said Duncan Stiles, partner and head of corporate finance at Stephenson Harwood.
“We continue to see strong levels of deal activity despite the uncertainty surrounding Brexit.
“It’s a really encouraging landscape. The investors that we surveyed clearly see the UK as assisting their growth and talent agendas.
“As we continue to move towards an increasingly global and digitalised economy, companies which want to stay ahead of the competition need access to new products and services, highly-skilled people and capital, and to find innovative ways of doing business.
“The UK’s enduring structural advantages, which include a sound legal system and well-ordered market, provide a predictable and stable foundation on which to build investment.
“While Brexit is clearly on investors’ minds – and poses the biggest risk to investment in the UK – it is certainly not a deal-breaker.”
Underlying strengths
The survey found companies that are continuing to look to the UK to achieve further growth.
Future deal–making over the next two years looks set to be driven by the UK’s strong capital-raising capacity, the maturity and advanced nature of the UK’s markets, and its diversified investor base.
Respondents also said technology and intellectual property are among the UK’s top attractions for businesses.
While sterling depreciation increases the UK’s attractiveness for international investors, it is more of a side benefit than a strong rationale for most deal-makers; while its reputation for fair dealing and a long-standing legal frameworks remain significant attractions.
Despite the uncertainty around the Brexit negotiations – given the right opportunity – many companies and investors are prepared to take the risk despite the risk of a ‘no-deal’.
