SCOTLAND’s mergers and acquisitions market is likely to stall next year amid the uncertainty about Brexit but overseas buyers and bargain hunters will remain on the lookout for deals, a leading corporate financier has said.

David Leslie said the uncertainty caused by the prospect that the UK could leave the European Union in March without having a withdrawal deal in place is prompting firms in key sectors to put plans for deal activity on hold.

“If we get into January and February and the political uncertainty has not settled you could find there is a fairly drastic reduction in deals in the short term,” said Mr Leslie, who formed his own corporate finance business after running PwC’s deal-making operations in Scotland.

He warned a no-deal Brexit would pose huge challenges for businesses which could leave the M&A market “very flat”.

UK-focused firms face the most uncertainty as the March 29 date for Brexit approaches.

Big businesses which are not reliant on the UK market, such as the Glasgow-based Weir engineering giant, may buck the trend and press on with deals in support of international growth.

There will likely be traffic heading the other way if overseas buyers are tempted to take advantage of the weakness of the pound to buy firms and assets in Scotland as deals become cheaper for them.

The oil and gas sector may be a special case, with the partial recovery in the crude price encouraging firms to invest in North Sea assets.

Some have won backing for ambitious expansion plans from private equity firms which are ready to put huge amounts of capital to work in oil and gas and other industries.

However, Mr Leslie reckons there could be a marked slowdown in activity among the privately-owned firms who account for the bulk of businesses in most sectors in Scotland.

Bullish types who feel they have coped with uncertainty before will stay in the market but these are likely to be in a minority.

Opportunists who are ready to do deals could find there are not many people willing to sell businesses unless they need to until the fog clears.

“Put it this way, I don’t think it’s going to be a sellers’ market,” observed Mr Leslie.

But, noting the M&A market is cyclical he said it could spring to life in the second half of the year if the political outlook improves in the first quarter. That could result in deals being agreed in time to be completed later in the year.

The appetite for deals remained relatively strong until recently. There are a number of transactions in the pipeline, some of which could complete in coming months.

Mr Leslie noted that funding conditions have been good with banks, private equity firms and business angels all ready to put cash into deals in Scotland.

His experience suggests the corporate sector is in fairly good shape.

“I’ve got a lot of faith in hard-working Scottish business community; they are very resilient,” he said.

The Leslie Corporate finance operation launched in 2017 has been helping a range of privately-owned firms with the development of their strategies and business plans and the assessment of deal options.

“Lots of companies that we are working with are in growth mode and are investing,” said Mr Leslie.

Some well-known Scottish businesses have been acquired by overseas bidders since the Brexit vote in June 2016.

The famous Caledonian hotel in Edinburgh was sold to Abu Dhabi-based investment firm Twenty14 Holdings for £85m in January.

America’s Travel Leaders Group bought Barrhead Travel the following month for an undisclosed sum.

Fishers, the hotel laundry business, was acquired in a £35m deal last year by Canada’s K-Bro as a platform for growth in the UK..

German giant Tchibo bought Glasgow-based coffee roaster Matthew Algie in August 2016.