What is driving the US interest in UK firms?

International | Mergers & Acquisitions | Reports

By Rob Crews, Partner, Momentum Corporate Finance

The US has been, and remains, a key source of purchasers for UK businesses.

Why is this?

There are many reasons which drive the high appetite of American business for UK targets, and which also attract UK businesses to sell to US corporations.

Deep pockets – American businesses are often successful in winning international auctions due to their ability to pay premium prices. This ability is underpinned by the fact that US businesses are often highly valued relative to their international competitors and so can pay higher prices without diluting shareholder value.  Also at present the exchange rate is at a relatively low level given the current uncertainty with Brexit – as such the American dollars are going further when buying sterling.

Europe – For an American business keen on expanding into Europe, the UK is often seen as an ideal Europe and we are not seeing any reduction in appetite from Americans – at least not yet!

A liberal and open market – The UK is not perfect, but it does have an economy which is open to the rest of the world and which, by global standards, is transparent. It also has a robust legal system and is relatively free from onerous bureaucracy and corruption.

Will it change?

Indeed, of the sell side deals we have completed since 2005 around 75% have been cross border and the significant majority of these to American based organisations.

Going forward, we do not see any reasons why these trends should not continue.

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