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17 October 2018
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FOREIGN EYES ON  THE UK’S FM PRIZE

Graham Davies
Graeme Davies writes for Investors Chronicle

9 October 2017 | Graeme Davies


The snap general election result has created more questions than answers for many industries - and FM in particular, writes Graeme Davies.


Many column inches have been written since last year’s EU referendum result on the fate of UK companies who currently operate in the European Union. But little has been made of the growing trend of businesses looking to buy into the UK market. Sterling’s weakness since the poll has tempted overseas buyers to consider acquisitions. 


Data from sector watchers at Livingstone shows that the level of mergers and acquisitions activity in the UK has grown steadily over five years despite the modest pace of economic recovery in the UK economy over that period and the growing uncertainty over the terms of Brexit. And within this, overseas buyers have increasingly played a part in the sector’s consolidation, tempted by the well-developed nature of the UK’s FM sector, and the fact that its assets look cheaper than for years.


Livingstone identified 51 deals during 2016 and more than 20 during the first half of 2017, compared with 26 in 2012. Clearwater International’s research shows that more than a third of deals over the year to June involved overseas firms buying UK targets. Notable deals involve French buyers Elis and EDF Energy Services buying Berendsen and Imtech respectively. US players are also playing their part and private equity from over the pond has seen targets here; witness First Reserve’s recent acquisition of G4S Utility Services and Morrison Utility Services. 


The UK remains one of the world’s most advanced FM markets but the potential for further growth remains and recent trends that have seen increasingly large and complex deals going to multidisciplinary suppliers have caught the eye of overseas players looking for long-term returns. 


The UK is a well-established market with solid regulatory backing and a good pool of potential employees. This may change with Brexit, and the prospect of the UK’s departure from the economic bloc is already having an effect on the number of workers arriving. The government is trying to counteract this by supporting apprenticeships and training schemes. 


But any acquisition requires significant due diligence and when it involves buying into an overseas jurisdiction that care should be even more rigorous. Still, the number of overseas buyers browsing is a vote of confidence in the UK’s FM sector.


Graeme Davies writes for Investors Chronicle