Research: Majority of UK business owners wary of UK break-up
The majority of UK business owners are bullish about the market value of their companies, in spite of pressures from the pandemic and Brexit. However, they are markedly concerned by the prospect of the break-up of the UK, as Scottish independence once again becomes a talking point.
Across all deal types, 2021 was a year of rapid acceleration, with worldwide deal value jumping from $3.7 trillion in 2020 to $5.3 trillion in 2021. This was buoyed by financial investors continuing their growing share of the landscape, closing around $1 trillion in deals.
The UK deals market was no exception to this trend – as exemplified by the demand for transaction advisory services among private equity houses in 2021. With the hunger for deals having shown few signs of slowing in 2022, the value of British businesses seems to be on the rise – in spite of three years of Brexit deadlock being followed by the chaos of a two-year pandemic.
On this basis, a new study from Arrowpoint Advisory, the dedicated mid-market team of Rothschild & Co in the UK, paints a bullish picture of UK business owners. The researchers found that there was a clear sense among owners that, having come through the worst of Covid-19, their businesses are stronger than ever. A majority of 77% asserted that their businesses are more valuable than before the pandemic – with over one-fifth stating it was “much more” so.
Of course, these findings varied across certain sectors. For example, more than one-third of businesses in the healthcare sector felt that their businesses were now much more valuable, while a further 50% added it was somewhat valuable – something which is not especially shocking considering the importance of their work during a healthcare crisis. However, all sectors saw solid majorities upbeat about their prospects when their owners were asked about a potential exit. Even in the weakest area, financial services, a majority of 62% found their businesses had grown in value during the crisis.
Divided Kingdom
This is not to suggest that business owners believe the value of their firms is untouchable, however. While 92% of owners that responded believed it had become easier to manage and grow their business since the end of the Brexit transition, they are significantly more pessimistic about another potential geo-political change.
In recent decades, the disintegration of the UK has increasingly become a political possibility. The historic 2014 independence referendum eventually saw Scotland’s electorate decide to remain linked with England, Wales and Northern Ireland. However, the election was heavily influenced by the assertion that the UK was part of Europe’s common market – and that should Scotland leave the UK, it would also leave the security that provided. Two years later, while Scotland and Northern Ireland returned remain majorities in the infamous Brexit referendum, voters in England and Wales decided to sever ties with the EU.
While the Westminster Government has made its position clear that independence is off the table, Scotland looks set to push ahead with another referendum – and the issue of EU membership may well play a key role in determining its outcome. The First Minister of Scotland, Nicola Sturgeon, plans to stage another referendum on Scottish independence by the end of 2023, and the prospect is already worrying businesses.
Arrowpoint found that the vast majority of business owners believe the break-up of the UK in the foreseeable future would be “a significant threat” to their ability to succeed. In fact, while 89% of respondents asserted as much, only 1% believed it would not have a negative impact on them.
