Brexit has sparked a flurry of potential merger and acquisition activity in Northern Ireland as several top performing local companies find themselves being wooed and stalked by the competition and other corporate admirers.
There is also evidence, however, to suggest that the ongoing fallout from the UK referendum vote could also spark a new trend where firms in the North look South to create a euro-friendly safe house.
According to the vice-president of Chartered Accountants Ireland, a growing number of Northern Ireland-headquartered firms are exploring the possibility of moving to a two-site operation, with one in the North and one in the South, to maintain their European trading arrangements.
Feargal McCormack, managing director of Newry-headquartered accountants PKF-FPM, says the increase in cross-border trade in the last decade had already inspired some businesses in the North to develop a sister site in the Republic but the Brexit decision may now force others to make the same investment.
Natural progression
McCormack says multi-site locations are a natural progression for expansion-focused firms and, with the Republic on the doorstep for
Northern Ireland
businesses, it makes strong commercial sense to explore the opportunities. PKF-FPM has just acquired north Dublin-based chartered accountants,
Francis J Woods
& Company.
It is not the Newry-based accountancy firm's first foray into the Republic – it already has a Dundalk office but, according to McCormack, it is not going to be its last.
“This just signals the start of further investment by PKF-FPM on the island of Ireland. We have a strong presence in Northern Ireland and we’ve seen strong growth in our Dundalk office so we believe that it is a good time to open a second office in the South. We had taken the decision before Brexit but it still makes sense for us to expand further,” Mc Cormack adds.
The addition of the Balbriggan office means the Newry company, which is part of the global network of PKG International, now operates from six locations on the island and will have more than 115 staff.
McCormack set up what was then FPM Accountants in 1991 – on Friday he celebrates his 25th year in business – and he says despite the “obvious challenges” that lie ahead for Northern Ireland firms it is crucial they remain positive about the future.
“Business owners don’t have the luxury of adopting a wait-and-see approach – they have to do business in the short term but still plan ahead. Businesses in the North are pretty persistent – they’ve had to be with everything they have been through – and sometimes persistence wins over economic logic,” he says.
But spending as much time as he does in the border town of Newry , he is acutely aware that Brexit could create dramatic and unwelcome changes not just for businesses in his locality but for the North as a whole if a physical border were to be introduced or the movement of people and goods were restricted by new EU legislation.
Rocked confidence
McCormack says the uncertainty that the Brexit decision has created has rocked business confidence among his clients.
There are many in business that also feel it has the potential to set the North back years and undo all that has been achieved, particularly in relation to cross-border trade relations.
But he believes it will not thwart the path to economic stability that the North has been travelling since the peace process. “We are in a much better position today than we were during the Troubles. We cannot underestimate the challenges that Brexit poses but we do need to be pro-active – sometimes we have a tendency to be parochial in our outlook and we need to remember that the world is our oyster,” he says.
Like everyone else he is mindful that there may be key issues out of Northern Ireland’s control. “I felt we were on the verge of something very exciting in Northern Ireland pre-Brexit with the prospect of a reduction in corporation tax rates to 12.5 per cent in 2018.
“But if the UK reduces its overall rate of corporation tax then this could add to the challenges Northern Ireland is already facing. I’ve always believed, and I still do, that attracting more foreign direct investment (FDI) would significantly help to grow our economy – it is not the only factor that is important but we have a very small number of plcs and we need to be able to attract new investment while supporting indigenous businesses,” he says.
