Five summer themes

When was the last quiet summer? Perhaps it was the same year as the last hot one? The pace of events might slacken in August –but let’s not bet on it. Still, it feels like a good time to take stock.  So much is up in the air, but we’re starting to get a better idea not only of BREXIT’s initial impact but also the official reaction and implications for M&A.

In this blog, I want to pull all this together, pulling out five broad themes that are shaping the capital agenda.  A BREXIT thread runs through this tapestry, but it’s not the only strand – and it’s not where we start.

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Why are UK profit warnings still so high?

UK profit warnings have hit their highest second quarter level since the financial crisis. Our analysis shows more companies warning – and more companies warning more than once. Why is this happening? More to the point, how can companies avoid profit warnings when the future is so becoming more unpredictable?

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28 days later…

We’re taking stock four weeks on from the result of the EU Referendum. A great deal of water has passed under some political bridges; but in terms of BREXIT practicalities we’re not much the wiser and won’t be for some time. The eye of the storm is focused on those most exposed to the greatest uncertainties and sterling transactions. As you move out to the edges, it’s looking more like “business as usual”, with the falling pound even creating sunnier skies for exporters.  But are the latest surveys signalling more trouble to come?

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And the world keeps turning…

It’s hard to take your eyes off what’s going on in the markets. We’re not ignoring these stresses and strains and this week’s blog covers the primary themes in four charts.  But, I also want to think more practically. Given that uncertainty looks set to be an overused word for many, many months yet, there’s a danger that we worry about everything and do nothing.  So, what can companies sensibly do now?

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BREXIT: sector challenge & opportunity

After quite a week for the United Kingdom we take stock of where we are. It seems that we won’t know for some time what shape the UK’s reformed relationships will take. So, for now, we can only assess the impact of uncertainty –  including a weaker pound – and look at the pinch points and opportunities by sector. This is a complex and nuanced picture  – with some potential bright spots,  as markets are starting to acknowledge.

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BREXIT

Yesterday’s historic UK referendum has delivered a vote to leave the European Union.  It will take time to work through the implications. So much is still unknown in terms of how the UK will negotiate its exit and build new trading relationships in the years ahead.  But, invariably, uncertainty affects economic and capital market activity – and this feeds market volatility; although governments and central banks also stand ready to react. 

This all adds up to a complex picture that we can’t hope to unravel in one sitting. The starting point for us today is how the various forces in play might reshape the capital agenda.   It was always the case that companies needed to think in terms of multiple futures– but BREXIT adds another dimension.

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CDOs talk disruption & deal making

On Monday we got together with leading Corporate Development Officers (CDOs) to discuss their changing role in disrupted markets. In many ways, the challenges they face are familiar ones.  CDOs have always contended with disrupted business models and decisions about where to position their company in the supply chain. What’s changed is the pace of change. This has put companies under pressure to get in early before they know who the “winners” will be – whilst technology, regulation and changing behaviours constantly shift where the value lies in the supply chain. As a result, CDOs are looking at vastly different target populations, employing very different deal tactics and challenging some of the fundamental assumptions that shaped deal making for decades. It’s a fascinating time to be doing deals and we were very lucky to hear such great insights from some of our leading CDOs – which we’ve captured in this week’s blog.

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