Over the past few weeks, we’ve been running a poll to get some broad brush views from the private equity industry on the effect of the EU referendum on activity – before and after the result. Respondents were directors of private equity backed businesses, directors of other businesses and private equity investors.  

With less than a fortnight to go until the event itself, here’s what our survey suggests.


Predictions of the result

Overall, the result was closer than we’d predicted, with 52% going for Remain as their preferred outcome, 43% for Leave and the remaining 5% not expressing a preference. Directors of private equity backed businesses voted unanimously in favour of a Remain outcome, but private equity investors were split.

Regardless of their own preferred outcome, 70% of all respondents predict that the result on the day will be in favour of Remain.

How uncertainty is affecting business now

Only 37% of businesses said that they were preparing for a possible Brexit, with most of those undertaking low level planning rather than in depth, perhaps reflecting the overriding view that Remain will come out on top.

The majority (61%) of firms – private equity houses and businesses – are not delaying investment decisions until after the result. Of the 34% who admitted that are, 29% are delaying only some of their investment decisions.

We have seen a number of private equity transactions – exits and investments – in the run up to the referendum. Despite the uncertainty over the outcome, primary transactions are tracking above 2015 levels, which were impacted by the general election. There have been a number of recent SBOs and strong exits, including the IPO of Joules in May and of Time Out last week, just a couple of weeks ahead of the vote.

The private equity landscape post-referendum:

63% of respondents thought that a Leave outcome would result in a decrease in private equity transactions in the next year.

However the long-term prognosis was mixed, with 39% of respondents predicting an increase in private equity transactions in the next 2 – 5 years, 35% who believe transactions will fall and 16% who thought that there will be no impact – suggesting that they believe business will adapt to whatever outcome.

In terms of future international investment in the UK, 58% of respondents believe it will decrease with a Leave result.

A waiting game

With the official polls seeming to swing different ways from one day to the next, the result is far from certain. Over the coming days, the media, politicians and business figureheads will be trying to rally last-minute support and influence the final result.

When we first began our poll, Remain looked to be ahead but in recent days, the Leave campaign has been gathering momentum. The markets have reacted strongly to this news, with the pound falling and share prices taking a battering.

As last year’s general election and the Scottish referendum demonstrated, the polls are not infallible. We can do nothing else now but await the real outcome.

What’s certain is that whatever happens, the private equity sector will be affected to some degree – positively or negatively. More uncertainty and nervousness surrounds a Leave outcome, simply because we’ll be moving into unchartered waters; it’s an unprecedented move, with no past experience to learn from.

But, as with the various economic crises and unforeseen events of the recent past have proved, private equity will eventually ride the storm, and come out fighting. It remains one of the best performing asset classes, and, Brexit or no Brexit, it’s not quite ready to be pushed aside just yet.


by Sam Smith, Managing Director