Overseas interest in UK food and drinks sector remains strong despite Brexit

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A new study has found that despite the uncertainty of Brexit and a slower global economy, the level of merger and acquisitions activity in the UK food and drinks market hasn’t slowed.

Research into the latest deals showed that deal activity in the first two quarters of 2019 remained consistent. In the first half of the year, 106 deals were completed, with 53 deals underway or completed in the second quarter.

The total disclosed value of the 14 public deals completed in the second quarter was £1.1 billion, which means the actual value of all deals combined could be far higher.

This total deal value was 50 per cent lower than the previous quarter, but market experts have said that this was the result of fewer ‘mega-deals’ taking place, which had inflated the deal value at the start of the year.

However, private equity deals were up in the second quarter of 2019, with figures showing 15 deals recorded – almost double the number in the first quarter of the year.

While the quarter showed a decline in larger deals, activity remained robust at the lower-mid end of the market, according to the study.

This is in part due to a surge of innovative start-ups in the UK market, which is encouraging inward investment, due in part to the weakened pound, which is making deals more cost-effective for overseas businesses.

Nigel Fry, a General Practice Partner at Milsted Langdon and an M&A specialist, said: “The cheaper deals on offer in the UK and the number of new businesses entering the marketplace have opened up tempting opportunities for foreign investors.

“While the food and drinks market has also experienced its fair share of problems, not least a decline in domestic consumer demand, Brexit seems to be having a positive effect on deals.

“If businesses are looking to sell then it is important that they seek professional advice to ensure the deal is arranged in the most effective and tax-efficient manner. To find out how we can help, please contact us.”

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