M&A industry welcomes new government

Mon, 11 May 2015 | BUSINESS NEWS

The M&A industry and business as a whole has welcomed the election of a majority Conservative government.

Prior to the election persistent concerns over whether or not any party could win enough votes to form a majority government put a dampener on business and deals. Now with news that the Tories, a traditionally pro-business party, are taking the reins of the country, the markets are gearing up once more for growth.

In the financial sector, shares in banks saw some of the strongest levels of growth on the markets, with shares in Lloyds Banking Group jumping 5.75 per cent after news of the Tory victory was announced. The reduced likelihood of increased taxation and levies on the financial sector was the likely cause.

On a broader level, the result is being heralded as positive for business in the large part due to the stability it brings to the markets. Rory Bateman, head of UK and European equities at Schroders, was among those to comment: “The UK election result has been taken well by the UK equity market and in the short-term provides businesses with a stable political and legislative background in which to invest for the future.

He continued: “The uncertainty around a hung parliament has been removed and the reinstating of a Conservative-led government which is perceived to be more business friendly has propelled the FTSE 100 by two per cent within the first hour of trading this morning. The more domestically-focused FTSE250 index is up three per cent.”

Others have reminded the government to act quickly to increase the chances of healthy growth. CBI deputy director general, Katja Hall, said: “With one of the most unpredictable elections in living memory now behind us, the new Government must get into its stride quickly. It should set out clear plans for the next parliament within the first 100 days, and have a laser-like focus on delivery.”

As we wrote prior to the election, there was a fair amount of hesitation among those in the M&A industry and deal levels showed signs of starting to stagnate. We urged our confident buyers to capitalise on the market's hesitation with the reassurance that the market was in a good place to pick up again post-election. Now that the Conservatives have taken power and things are starting to move again, it will certainly be interesting to see just how mergers and acquisitions deals develop.



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