- Weaker sterling offers more opportunity to foreign investors.
- Conversely, political uncertainty and lack of a new U.K./EU settlement will be a disincentive for buyers. U.K. M&A activity slowed in 2016 while the outcome of referendum was awaited. Other European M&A activity is likely to remain challenging while the EU responds to Brexit, as well as other crises.
- Will the U.K. merger control regime remain connected to EU standards? There may be an increased need for U.K. merger control filings following the formal exit.
- Activity in sectors dependent on the final outcome of new U.K./EU arrangements (e.g., financial services) is likely to be depressed until a new settlement is reached.
- It is possible that cross-border merger rules as well as rules with respect to European companies (Societas Europaea) may no longer apply in the U.K. following formal exit.
- Although English contract law is largely unaffected—and it is likely that this will continue to govern many cross-border M&A transactions—there is an increased change-of-law risk. The U.K. will need to review much of its existing legislation and, depending upon the final form of the new settlement with the EU, may introduce significant changes.
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