Last week we had the privilege of hearing from Cahal Dowds, Vice Chairman and Head of US/UK M&A Corridor at Deloitte UK at our monthly Corporate and Partner Roundtable session.

Cahal has 32 years of experience in the finance industry, and he shared his expertise with members on the transatlantic flow of capital through the US/UK Mergers and Acquisitions (M&A) Corridor. He was supported by Aaron Faulds, Director of Advisory Corporate Finance at Deloitte.

The UK and US are two of the most important economies in the world, and despite current economic and political uncertainties, they continue to trade and invest at record levels. In fact, the US buys more assets in the UK than all other countries in the world combined, with £1bn of assets ‘trapped’ in the UK which need to be spent.

So why is this?

Cahal explained that there are a variety of reasons underpinning the strong M&A corridor between the UK and US, with one of the main being that we both share the same language. The UK is also seen as a very attractive place to trade; not only does it have a well established and trusted economy, but it can offer a gateway to Europe for many investors.

There are a number of other economic reasons for the volume of M&A deals including the strong value of the stock market, low interest rates and the current favourable exchange rate. All of which make M&A between the UK/US an attractive opportunity.

How has Brexit impacted the US/UK M&A Corridor?                 

Through Cahal’s insight, we learned that post Brexit, US investment in the UK actually increased by 3%, despite the downward trend of -10% in US acquisitions internationally. It seems that US businesses are looking beyond the uncertain politics and focusing on the long term, concentrating instead on our attractive legal and governance systems. From an M&A perspective, the impact of Brexit seems to have been largely political rather than economic in impact.

And  the Impact of the US Election?

Similarly, the impact of President Trump’s elections seems to have been more political at this point, though Cahal did point out that the President’ cabinet appears to be the most business experienced in recent times, which may prove positive for commerce.  Again, Cahal re-iterated the long term, strategic nature of US investments in the UK which do not seem to be affected by relatively short term issues.

Wrapping up our lively discussion, Cahal left us with some key takeaways on how Scotland can continue to be an attractive destination for US M&A investment:

• Continue to be innovative and unique
• Invest in the thriving technology, media and telecom (TMT) sector
• Focus on strengthening the quality of our businesses and products over increasing their scale
• Invest in education to grow smart, unique and innovative future entrepreneurs

This was a great and highly insightful discussion, and we thank Cahal and Aaron for their time. Our next roundtable discussion will be delivered by Rob Masson, Head of Cruise at Forth Ports.