Read Andrea Williams’ first blog on Brexit which highlights her main observations from recent industry events and participation.
Since taking on the role of UK Managing Director for Intertrust in October, my feet have hardly touched the ground and UK political events have been moving along at a similar pace. As I pick up the Evening Standard for my commute home, I wonder what could have changed since reading the Metro in the morning.
Our UK office is located in the heart of the City and is a strategic hub for Intertrust, therefore I have been immersed in Brexit and most importantly what it will mean for our clients. Recently I have been involved with two events which have highlighted the thought processes our clients should be considering at the moment.
Firstly, we surveyed CFOs and COOs within the private capital industry on their current sentiment toward, and actions for, Brexit at a private event hosted by the British Private Equity and Venture Capital Association (BVCA). A detailed study of the findings can be found here, but I was struck by the fact that 40% of respondents have taken no action to prepare for Brexit and 80% believe that a deal will be agreed ahead of the 29 March 2019 deadline. A review of UK structures would be a natural first step even whilst outcomes remain uncertain.
I also participated in a Brexit round-table discussion organised by Real Deals with senior experts from key City firms including deal makers, advisers and investors to discuss how private equity firms are managing their portfolios and teams at this time of uncertainty. One of the issues highlighted was how the uncertainty around Brexit has impacted valuations. Points to consider were whether assets and opportunities are priced for risk and whether “buy” opportunities were missed due to opposing views as to the extent of said risk.
Nevertheless, Brexit is still expected to present opportunities, with 14% of respondents to the BVCA survey seeing it as a buying opportunity. The Brexit round-table discussion also believed there could be an increase in leverage and liquidity challenges and opportunities to due to hesitation to deploy investor capital and the increased attractiveness of debt.
Admittedly there are many moving parts and uncertainties, including the delayed UK parliament’s vote originally scheduled for 11 December, but of this I am certain: