Baker & McKenzie has warned that a ‘disorderly’ exit of the UK from the EU could cost the global M&A market up to $1.6 trillion.
Baker & McKenzie‘s Global Transactions Forecast, based on financial modelling by Oxford Economics, shows the potential scale of damage for markets and deal making activity of both an ‘orderly’ and a ‘disorderly’ exit of the UK from the EU.
Political and market uncertainty
It suggests that a lack of a clear plan may bring about ‘a more damaging cycle of political and market uncertainty,’ the impact of which would be felt disproportionately in the UK and the rest of Europe but would also in the whole global market.
London still busy
The firm’s central scenario forecasts M&A activity worldwide to only be slightly down in the next few years and then to recover fully. Furthermore, while UK domestic deals are down under either scenario, the primacy of English law for many cross-border deals (including those which don’t involve UK assets or business) means that there will still be plenty of London-based activity.
Tim Gee, a London-based M&A partner at Baker & McKenzie, commented: ‘In the last few days we have seen evidence that the M&A market in the UK won’t come to a crashing halt even if it won’t be at its previous pace. There are still plenty of buyers and sellers for the right deal at the right price.’