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19 Sep 2018

Stephenson Harwood explores investor attitudes towards the UK

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  •  88% of investors say the UK remains an attractive deal-making destination, post-EU referendum
  • 60% of investors expect to complete at least one UK deal in the next two years
  • only 1% of those businesses that completed one or more deals in the UK over the past two years are not planning future deals because of Brexit
  • The UK's standout attractions include its quality of technology and IP, economic stability and its skilled workforce 
  • The established legal framework appeals to foreign investors

A research report by law firm Stephenson Harwood LLP reveals that the vast majority of investors believe the UK remains as attractive an investment destination as it was pre-EU referendum.

Deal Appeal, published today, uncovers the attitudes of domestic and international investors towards the UK as a deal-making destination. The views of 300 executives – from mid-market businesses involved in deals ranging from US$70 – US$700 million – were gathered in research conducted by the firm.

88% of those surveyed said that the UK remains at least as attractive as it was in spring 2016. Standout factors include the quality of technology and intellectual property, macro-economic stability and a skilled labour force. Indeed, 88% of the investors have completed at least one deal in the UK over the past two years; of those, only 1% said they were not planning a UK deal in the next two years because of Brexit ambivalence.

"This report reflects our own experiences and confirms investor confidence in the market. We continue to see strong levels of deal activity despite the uncertainty surrounding Brexit," said Duncan Stiles, Partner and Head of corporate finance at Stephenson Harwood. "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."

The results confirm that companies 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. Furthermore, the report's finding that technology and IP are among the UK's top attractions for businesses is in line with the UK government's drive to put the UK at the fore of future industries, including artificial intelligence and the data economy.

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; the UK's reputation for fair dealing and its long-standing legal frameworks remain significant attractions.

The survey clearly demonstrates that the UK has been, and remains, an enticing deal-making destination for investors. While uncertainty continues around the Brexit negotiations, and their eventual outcome, it is clear that – given the right opportunity – many companies and investors are prepared to take the risk of an unexpected or 'no-deal' Brexit, and will continue to pursue opportunities in the UK.

To download a copy of Deal Appeal, please click here.

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Duncan Stiles

Duncan Stiles
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