There are 3,459 miles and an Atlantic Ocean that is, on average, 12,000 feet deep that separates New York and London, and while the pound and financial markets have not quite fallen 12,000 feet, news programs and prognosticators might lead one to believe so.

At CMF, we have contemplated the events of the past several weeks and for U.S.-based PE shops, we see more positive than negative in the wake of the British developments in the following ways:

• Lower for longer – a month ago, the experts concluded that the chance for an increase in interest rates in June 2016 was 26 percent; post Brexit, we at CMF see a near zero chance of an increase for the balance of 2016 and believe there may be no increase until 2018.
• Better Pricing on the Buy Side – The global volatility associated with recent events in the UK has tempered optimism; we believe this tempered optimism is going to provoke entrepreneurs who are on the fence about selling their business to do so, and larger corporations with non-core assets to carve them out.
• Strengthening dollar – This creates a buying opportunity through lower dollar-denominated pricing for potential international bolt-on acquisitions for U.S.-based PE-backed platforms.
• Growing political uncertainty in Europe and Asia is putting businesses located in those regions on their heels. U.S.-based middle market companies (many PE-backed) should take advantage of the fact that their international competitive set is preoccupied with issues that, at least at the moment, are not as materially present in the U.S.

However, the lesson that we should take from the events in England are related to the economic consequences of politics that are so fractured that they materially disrupt the confidence in the economic fundamentals that support the returns of existing and future investments in a particular country.

See full newsletter here.

Copyright © 2016, CBIZ, Inc. All rights reserved. Contents of this publication may not be reproduced without the express written consent of CBIZ. This publication is distributed with the understanding that CBIZ is not rendering legal, accounting or other professional advice. The reader is advised to contact a tax professional prior to taking any action based upon this information. CBIZ assumes no liability whatsoever in connection with the use of this information and assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.

CBIZ MHM is the brand name for CBIZ MHM, LLC, a national professional services company providing tax, financial advisory and consulting services to individuals, tax-exempt organizations and a wide range of publicly-traded and privately-held companies. CBIZ MHM, LLC is a fully owned subsidiary of CBIZ, Inc. (NYSE: CBZ).