British owned businesses have certainly lost their sheen in the recent times and there is no escaping the fact. It is also quite clear that the reason for this sudden lack of interest is the impending Brexit and the many complications that it has created. Foreign purchases made over the nine months of the year until now, in businesses with British owners, has touched its lowest point since the year 2010, says a study.
Low valuations are not attracting buyers anymore
In a typical scenario, toppling market valuations would a viable buy signal for savvy investors who can buy at low prices and sell when the business stabilizes. However, the current situation seems to be deviating from this norm quite drastically. Foreign firms are not showing a great deal of interest in British-owned businesses despite low valuations right now.
This was revealed by a study that examined various buyouts and merger deals that have taken place between UK-based businesses and foreign players in the recent times. The figures show a dramatic decline in the number of such deals, clearly outlining that they have dipped in the nine months of 2017 to touch a low that has not been seen since 2010. The study was carried out by a consultancy called EY.
Cash-rich British companies still are not attractive prospects
What is most surprising in this scenario is that British companies are now cash rich after consecutively posting great profits for three years. Despite this fact and also despite the strong balance sheets of the companies supported by the subdued pound, the foreign investors are still hesitating to move into British compounds to take over or merge with these businesses. Given the sharp contrast in this situation, it is clear that what the investors are lacking is confidence that the businesses will be allowed to grow in the coming months post-Brexit.
According to EY's experts, UK is now forced to stand by and watch opportunities slip away as a global trend for foreign mergers and acquisitions is underway. In particular, the businesses in Eurozone seem to be having a special edge here with sudden increases being witnessed in cross-border activities seen over the past one-year period. With the confusion and controversy about the nuances of Brexit continuing to plague Britain, it is not clear when confidence will return to the investor world with respect to these businesses.