Following the referendum, deals likely to be pulled and critical contracts re-negotiated Businesses across the UK and Europe now face a race against time to prepare for Brexit, according to advisers at London headquartered international law firm Pinsent Masons.
Research conducted on behalf of the firm by YouGov in the weeks leading up to the referendum found strikingly low levels of preparedness among businesses in France, Germany and the UK itself for the aftermath of a British decision to leave the EU.
The Pinsent Masons’ poll of senior decision makers in over 1000 businesses across Europe found that only 1 in 4 of the organisations surveyed had a tangible plan for dealing with risks arising from a ‘Brexit’, while more than half of respondents (53%) said there had been no discussion at Board level about the potential impacts of Brexit.
“The uncertainties in a Brexit scenario are so great that there may be a temptation to do nothing until negotiations start to create a clearer picture. However, the days when a business can say ‘wait and see’ are gone. While one cannot protect against all risks, it is important that there is no panic – it is possible to identify the risk areas and get on to the front foot. Adopting a ‘wait and see’ approach may mean doing nothing for years,” Guy Lougher, a London-based Partner and Head of the Brexit Advisory Team convened at Pinsent Masons, said.
“Already we are advising our clients on the review of business-critical contracts. Agreements which specifically reference the EU as the territory governed by the contract may lack clarity. There may also be ambiguity around how the impact of tariffs will be shared. The sooner amendments can be agreed or terms negotiated, the more businesses can increase their sense of certainty”, Lougher, added.
“Deals which have been on ice or contain Brexit clauses may be renegotiated or even pulled and raising new finance in such an uncertain environment will be more challenging. It was surprising, looking at the research we undertook, how few businesses entered into discussions with investors and funders ahead of time. Again, that now has to become a priority and if we see a period of volatility in the markets as predicted, some of those conversations will be pressing.”
“People will also be starting to assess how fundamental changes to Freedom of Movement might impact staff and operations. The one in ten businesses who have discussed moving operations abroad are likely to renew those conversations, while others may start to look at their options in earnest.”
Of the sectors analysed in detail, the financial services sector emerged as the most prepared for change with 58% of respondents involved in FS saying they have had Board level discussions and 51% having a plan of action. This compared to construction, where just 27% claimed to have plans in pace.
