There is no doubt that there have been a number of political upsets this past year. What is less clear is whether the new era being ushered in is the best of times or the worst of times. Opinions are subjective and may depend on the timeframe.
From a short term perspective, Tughans has been involved in a significant number of deals this past year. We recently were ranked as the No. 1 NI legal advisor in 2016 by Experian. We have been ranked No.1 for the past 2 years, having advised on 31% all deals in NI in 2016, 38% more than the next placed legal advisor, representing 62% of total deal value in NI for 2016. This high transactional activity could be attributable to a number of short term factors such as the drop in the exchange rate. The weak pound has meant NI export businesses can be more competitive. They are also more attractive for foreign buyers and investors, offering better value.
People recognise that the main impact of Brexit and Trump may only be really felt in the longer term. Brexit, after all, is at least a 2 year process and investors may have the opportunity to successfully realise a return on their cash before the UK’s exit from the EU can have a detrimental effect. In the longer term, we await to see what the impact of Brexit, Trump and the upcoming Stormont election will have on the sustainability of deal volume and deal values.
It is the epoch of belief, with Brexiteers seeing the UK’s exit from the EU as an opportunity to negotiate more favourable trade deals and unburden business from constraining EU regulations. Equally, it is the epoch of incredulity, as Remainers continue to argue that these trade deals could take years to negotiate, bringing uncertainty for the economy and businesses. Deregulation for NI businesses exporting to the EU is not a reality, having to continue to comply with at least some EU regulation.
Incredulity also stems from our 24/7 news feeds and omnipresent social media, as businesses have to sift through “alternative facts” and “fake news” to evaluate the impact of political decisions on their business strategy. Will Trump reduce corporation tax in the US, making NI investment less attractive, especially if Stormont fails to meet the conditions for setting our own rate of corporation tax? Should NI look East rather than across the Atlantic for investment and export opportunities? Recent Asian investment in NI with the acquisition of SDC by Chinese company CIMC and CGN’s acquisition of 14 wind farms across NI and ROI demonstrates the Eastern interest and potential for NI businesses.
NI businesses may be waiting in eager anticipation but with some trepidation as the political events take their course. What isn’t an option is standing still. We need to identify the opportunities, tailor our strategies and businesses to maximise the possibilities but try to safeguard against the risks that might arise. Tughans will review the opportunities and challenges facing NI business in the next few months to consider how best to weather the storm.
Let’s look to a spring of hope and forget about a winter of despair, with everything before us.
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