Brexit uncertainty: fewer mergers, big business winners

(by Peter Ormosi)[1] While it is widely recognised that last year’s EU referendum caused significant uncertainty for markets, some early indications were that it had not reduced the level of business confidence. Almost a year on, our research – based on a careful study design of a treatment and control group and using data from S&P’s Capital IQ  – finds that the uncertainty surrounding the referendum has in fact led to a significant drop in merger numbers and the numbers have failed to recover to earlier levels.[2] Apart from establishing a causal relationship, the study suggests that the post-referendum policy uncertainty is helping the largest M&A transactions, while hindering the smaller ones, with possible negative consequences.