We often hear in discussions with business-people the, usually off-the-cuff, remark that a weaker sterling should make UK companies more attractive to overseas buyers. After all weak sterling, equates to lower purchase price in the buyers own currency. QED.
This ignores the fundamental truth however that at a micro level, all M&A boils down to the purchase of cashflows.
And as the purchase price steps with the exchange rate, so does the value of those cashflows. When translated back from sterling - both aspects (price & cashflows) are lower, ceteris paribus. Any currency gain or loss is speculative in this context and not connected to the fundamentals of either acquiror or acquiree.
The real value in any transaction is what will strategically drive those cashflows to be greater than the sum of the parts - not currency engineering that will merely ebb & flow in terms of return.
Ultimately - unless you really are a just currency speculator (and if so, why not just buy currency rather than the inefficient medium of a business?), our experience shows time and time again that there is no substitute for a clear, well defined strategy behind M&A.
From an advisors perspective, you should demand that they are in a position to unearth, understand, qualify and explain any potential buyer's true need to acquire your business.
Rockworth's approach is centred around unearthing the strategic drivers behind potential acquirors appetites, both domestic and overseas, ahead of any specific discussions on clients.
Why put up the 'for sale' sign to all when you can just approach those who see a truly accretive fit and drive a truly competetive process?
A financial sponsor would usually have a vision of how it could drive a company forward once it has acquired it, regardless of macro situations. . . According to figures from Dealogic, there is little evidence to suggest that a weaker sterling has resulted in an increase of interest from overseas buyers.