Global M&A activity down in Q1 due to Brexit uncertainty

Global merger and acquisitions fell by 17% in the first quarter of the year as fears of an economic slowdown and the growing uncertainty around Brexit dampened CEOs’ interest in pursuing takeovers.

According to Reuters, dealmakers were anticipating a slowdown in M&A activity this year after 2018 turned out to be the third-strongest year on record. Even so, the very big drop seen in cross-border activity (45%) was a sign for concerns.

Activity in Europe plunged 67%, according to Refinitiv data, dragging down global M&A volumes to $927bn.

“Many companies feel there is a lot at stake given all the uncertainty surrounding Brexit and the trade tensions between the U.S. and China,” said Dirk Albersmeier, co-head of EMEA M&A at JPMorgan Chase & Co, according to Reuters.

The current uncertainty in British politics as a result of Brexit is causing home and overseas buyers from bidding for companies in London.

Indeed, the UK was replaced by Saudi Arabia as the world’s third-largest M&A market, with activity down by 62%.

Another factor behind the fall in M&A transactions was the growing fear of a looming economic slowdown, which had already seen central banks shift their policy bias away from further tightening.

Earlier in March, the U.S. Federal Reserve abandoned projections for any interest rate hikes in 2019 and the European Central Bank had also said it would stay put.