The June 23, 2016 Brexit referendum has created substantial ongoing uncertainty regarding its ultimate impact upon the UK economy, the continental European economy and the global economy as a whole. Whether or not ultimate implementation of the Brexit decision turns out to be a “good thing” or a “bad thing” (economically, politically and otherwise) will depend upon whom you ask. While it will be some time before the dust settles sufficiently to make a fair assessment of the actual outcome, it is probably safe to say that it will be a “mixed bag” on an overall global basis.
As an M&A attorney who works primarily with French clients doing business in the United States either by organically growing a new operation here or by purchasing an existing U.S. company, I frequently get asked, “Do you think Brexit will hurt your French practice?” As a lawyer who is neither an economist nor a political scientist, my “layman’s” answer to that question, based on my own anecdotal experience to date and the opinions of many of my French clients and colleagues, is that the impact will be neutral at worst and positive at best.
The bumpy road that lies ahead for the European Union attributable to impending Brexit will undoubtedly be reflected by peaks and valleys in European securities markets and in the general level of investor confidence in the long-term stability of the EU and its members’ economies. While the United States is, at least in the short term, facing a certain degree of political and economic uncertainty owing to a Presidential election that is guaranteed to have a historic outcome (regardless of what that outcome turns out to be), the current continuing strength of the U.S. economy on a comparative basis appears to have further encouraged French innovators and businesses to look to the United States as a promising target market and a key element of their growth strategy. Assuming that such economic strength continues following our own “Brexit-like” decision given the (to some, excessively) business-friendly bent of both major candidates, the flow of French investment into the United States (both organically and through M&A activity) will likely continue along its current path as Brexit becomes a reality.
Based on my experience thus far since June 23, 2016, I have seen no slowdown whatsoever in the enthusiasm of French strategic and financial buyers for expanding into the U.S. market. Given France’s culture of innovation and engineering excellence that is continually producing break-throughs in areas such as clean-tech/alternative energy, medical devices, life sciences and software, that trend should be a very positive development for both countries.