Treatment for Brexit wounds - PwC Scotland deals team expands its thoughts on leaving

Commenting on the immediate outcome of the referendum that will take the UK out of the EU, David Leslie, said: “There has been an understandable reaction in domestic and global financial markets following the referendum result and we anticipate a period of uncertainty as markets come to terms with events.

“We have already seen a number of deals be paused since the result last Friday, but it is too early to see if these deals are merely delayed or cancelled.

“Reflecting on history, after-market shocks such as the dot-com bubble or the financial crisis have taken up to 18 months to show signs of recovery and growth in the deals market. In the current circumstances, we also expect participants to adapt to the ‘new normal’ in the deals market. Exactly what that ‘new normal’ might look like remains to be determine.

“Despite this backdrop, we still expect that transactions will happen. The banks are well capitalised, there are always deals to be done and there is no shortage of money still be invested from a wide spectrum of debt and equity sources including private equity. There are still investors and they are looking for confidence and stability.

“Scotland has a large pool of quality companies with world leading IP, technology and human capital. These businesses are - and will remain - strong and attractive irrespective of the underlying uncertainty. Additionally, the fall in sterling could be viewed as a positive for exporters and those looking to invest from outside the UK.

“In summary, we think there is a high probability of a short term reduction in volumes in the deals market, but we expect the market will recover and continue to prosper in the long term. We do not believe that the market is permanently weakened.

“Our advice to clients at the moment is to engage with your stakeholders, whether that be employees, customers, suppliers, industry associations and investors. From a board level down, assess the impact of Brexit on your operations but also assess the impact on your strategy. This strategic plan will be an evolving document as we understand more about the outcome.

“We are also advising our clients to engage with peers through their sector associations and trade bodies. We are entering uncharted territory but by co-operating together as an industry will have a greater impact than acting alone.”

PwC is committed to helping its clients as they adapt to new market conditions and opportunities which will arise as a result of last week’s referendum result.

PwC has a long standing presence in the Scottish deals market under David Leslie’s leadership, having traded for over 30 years and throughout this time we have witnessed the peaks and the troughs in the market.

At the beginning of the year we witnessed positive momentum in the market and we advised on 4 industrial deals in the space of 4 months including the sale of InterBulk Group plc to Den Hartogh Holdings BV for £95.2m and the sale of Worldmark to CCL Industries for C$252m.