Interview with Graeme Carling: UK in turmoil and the impact on the M&A sector – An international investors perspective

UK-born businessman Graeme Carling and his wife and business partner, Leanne operate their multiple international businesses between offices in Dubai, Spain and the UK, whilst travelling around various other worldwide locations looking for investment opportunities. The couple, having built a significant residential property portfolio, acquired multiple multi-million-pound businesses, and become one of the most well-known Scottish business couples, cited the business environment as their primary reason for operating from multiple international offices.

Graeme and Leanne’s family investment office, The Carling Group, invests in multiple sectors including building services, healthcare, technology, and real estate, in markets around the World. The M&A specialists have been watching the fast-changing political situation in the UK and discuss the possible impact these events will have on the M&A sector in the short-to-medium-term.

Speaking from The Carling Group’s Malaga-office, Graeme Carling offered his insight on the impact of recent turmoil in the UK on the M&A market.

You invest in markets across the World and speak to other investors, including large institutional investment houses, what is the general opinion of the UK as an investment opportunity right now?

The people that we talk to regularly are bewildered at the chaos that has ensued the UK. As much as chaos can provide some fantastic opportunities there really is a caution being taken until some form of stability is in place. Clearly in terms of £ value, it is a good time for foreign investment, but the political turmoil appears to be completely negating that value factor for foreign investment. This is on the back of years of uncertainty surrounding independence referendums, Brexit etc and now 4 chancellors in 4 months and another change of PM.

There are plenty of investors who thrive in chaos, in your opinion does the M&A sector, or does it need a level of predictability?

It absolutely needs some stability after the last few weeks as with the number of complete reversals of policy and the worldwide confidence in the UK this has created much fear and caution.

We’ve heard political commentators discussing a ‘run on the pound’, what do they mean, and do you believe this has happened?

I don’t really understand what the mean by run on the pound as I can’t see people withdrawing or moving large amounts of Sterling given the current value. What we are seeing is a devaluation of the currency through government intervention and market confidence and traders exploiting this through shorting the currency. The political turmoil has allowed this, and speculators and the political chaos has exacerbated this in the short term.

Why is it important to you, as someone who invests in businesses, to have stability in the financial sector of a country/ region where you invest?

It’s essential in order to deploy capital in countries where there is rule of law and stability, otherwise the risks are just too big.

You speak to many business owners, how have the events of the past few months impacted their attitude towards selling their business, or not?

There is a mixed bag, some people are still in survival mode post-Covid so are waiting until they recover and there are others who are nearing retirement that are desperate to get out as their business is being hugely compromised from a value perspective given the turmoil in the marketplace and the finance markets.

With the movement of businesses and money from one currency/ country to another, what do you predict will happen as a result of the turmoil?

There is no doubt that some huge sums are being made in this market with regards to currency trading. My view is that this will be short term as far as the UK and the £ is concerned, but it is imperative that we have political stability and clarity on policy ASAP.

The new chancellor has already intimated corporation tax will rise from 19% to 25%, what impact do you think this will have in the short to medium term in terms of business sales and m&a activity?

This will absolutely have a negative effect in terms of investment into the UK. Why would investors, who can deploy their capital globally, invest in a high tax country with the recent record of political turmoil and changes to policy.

The overall devaluation of the pound against major international currencies, what are the positives and negatives of this in terms of M&A activity?

From a foreign investment point of view there should technically be value in £ assets, however this is being negated by the political turmoil and the increase in taxes.

Do you expect an increase in the number of people looking at moving away from the UK?

Absolutely, although in the short term this is being made more expensive due to the value of the £ versus other currencies.

Are UK business owners less likely to find an exit from their investments as a result of the turmoil? Or are there still plenty of international options?  

Given the turmoil this will undoubtedly delay investment and slow down M&A where finance is required to get the deals done, though investors who have cash will be looking deploy that cash quickly and take advantage of the value in the market during this time.