According to recently released data from financial services giant Ernst & Young (EY), UK takeovers of overseas rivals have increased by 16 per cent during the last year, rising from 641 to 766. The report states that the value of the takeovers has also increased, by almost 60 per cent, from a previous £28.3 billion to £67 billion.
This recent increase has resulted in the UK becoming second only to the US in terms of the number of takeovers of foreign companies, leaving Japan, China and Germany behind. There have been a number of deals that have stood out, with the takeover of ONO – the Spanish cable operator – by Vodafone in a £6 billion deal.
EY states that the number of deals orchestrated by UK companies had risen to 2,726 – a 5.3 per cent increase. EY also stated that mergers between UK companies were ‘static’, adding that the overseas takeover activity confirms the UK is an important component of the mergers and acquisitions (M&A) market.
The head of transaction advisory services for UK and Ireland at EY, Jon Hughes, believes that UK companies are seeking growth opportunities in other markets to support expansion of their business models. According to the main European and UK economist at IHS Economics, Dr Howard Archer, lower oil prices are helping with manufacturers’ margins, giving reason for optimism in the manufacturing sector, with an increase of three per cent for orders during December. Retailers celebrated a 4.5 per cent increase in sales during November, possibly due to Black Friday sales.
Preparing for takeover
Before deciding to make an offer for an overseas company, check the credibility of forecasts and business plans so that you have a clear understanding of the operational, financial and commercial metrics. Finance outsourcing will save valuable resources in the long term, while ensuring that all financial implications are understood.
Identifying risks
Check for any issues or risks that could pose a problem for you when the acquisition is complete. A strong management team is crucial so that you are assured the company will continue to be well run on completion of the deal. Research the overseas markets before considering any takeover, so that you have an increased awareness of demand.
Before taking the first steps towards making an acquisition, it is advisable to seek professional advice to check your own business health and that of the overseas company. Contact us today to discuss your options.