The only “off the shelf” and relatively de-risked model available for the UK’s future relations with the EU is the Norwegian solution.
This would involve remaining in the EEA and would provide access to the single market and the least disruption. However, this may require a Swiss referendum as it would require rejoining EFTA, and the unanimous agreement of the remaining 27 EU member states.
However, the UK's position on maintaining access to the single market has recently appeared equivocal, with David Davis, the new Brexit minister, saying he may prefer alternative considerations in the country's negotiations with the EU. Current signs are that the UK will aim for a variant of the EEA arrangement, negotiated on a bilateral basis with the EU, which would not involve complete freedom of movement.
The concern for UK financial services companies, including private equity fund managers, is that the UK may seek to trade off some of the country’s access to the market for control over migration or other negotiating aims.
If the UK fell outside the single market, private equity firms may have less flexibility as to how to structure acquisitions in the EU. The decision of the European Court of Justice in the case of Inspire Art in 2003 confirmed the principle that investors could effectively choose any EU company structure regardless of where the business is based in the EU. As a result, given the various attractions of the English LLP, there are many thousands of European businesses and funds using this structure. While it is likely that transitional arrangements would be put in place for existing LLP structures, the future availability of these more flexible arrangements would be put in doubt.
Clearly, the negotiation of a bespoke arrangement which results in anything other than a replication of the UK's current access to the single market will present logistical as well as political challenges in the negotiations to come. Moreover, the length of time it may take to negotiate a bespoke settlement can only raise the level of uncertainty faced by business – even lawyers are now looking at contingency plans involving Dublin operations!