US fortunes bode well for UK

Last week saw a tidal wave of activity with four mega deals valued at around £60bn leading the way.

If its true that the UK is always one step behind the US, then things should be rosier in the corporate finance sector on this side of the Atlantic by next year.

The biggest deal last week was Bank of America’s agreed $47bn all share-offer for FleetBoston Financial. The latest wave of deals has come from a variety of sectors, once again proving that confidence in the US is high.

The US’s largest health insurer was formed from the agreed takeover of Anthem and WellPoint Health Networks, while British American Tobacco announced it was merging its US subsidiary with chief competitor RJ Reynolds in a $6.2bn deal.

Anyone involved in the corporate finance sector will admit that, ultimately, it’s the strength of the stock market that will determine overall business levels, particularly IPO activity.

The year has been also marked by rapid, almost outlandish recovery in many US stocks. On the other hand, European markets have begun a more moderate recovery phase.

US TMT stocks have led recovery this year. From the ashes of corporate disasters and the notorious Internet collapses, the TMT sector has made a comeback. Amazon, for example, increased 900% this year on the back of rapidly improving revenues.

The UK’s tech sector is tiny in comparison, but has staged a 300% recovery this year and the past month has seen the successful float of UK tech concerns Wolfson Microelectronics and IP2IPO.

However, there is cause for optimism. While new guidelines on corporate governance have been drawn up in the US to increase the number of independent non-executive directors on US boards, the biggest UK shareholders have shown they are prepared to flex their muscles to ensure boardroom integrity.

Fidelity’s dramatic coup to unseat Michael Green as future chairman of the merged Carlton and Granada group could be a sign that the response to the excesses of the 90s will indelibly change the corporate landscape.

Related reading

PwC office 2