M&A is approaching a record high – can it last?

PAS
Deal-making in the first quarter of 2018 hit near-record levels and the appetite for M&A shows no sign of dying down, according to our 18th Global Capital Confidence Barometer (CCB).

Of the 2,500 executives surveyed globally about the 12 months ahead, more than half plan an acquisition, most (84%) expect global M&A to improve further, and nearly three-quarters predict an improvement in global economic growth overall.

Deal-making results in new entities and creates cross-border opportunities for all of our service lines. In particular, respondents said they are interested in investing in the US, Brazil, Canada, China and the UK.

Disciplined deals

Previous M&A market highs in 2000 and 2007 were followed by falls. Yet the latest CCB findings suggest the current activity levels are sustainable for the year ahead.

Executives also believe this is partly because of “disciplined deal-making,” as companies constantly monitor and review their portfolios. This makes them more alert to new opportunities and better able to respond quickly.

“Disciplined deal-making is now a cornerstone of M&A,” says Steve Krouskos, Global Vice Chair — TAS.

“Data is more available and transparent, allowing executives to make better investment decisions. Executives will look to M&A as a growth engine, but they are also walking away when the strategic sums do not add up.”

Set to continue

While nearly half of respondents cited geopolitical uncertainty as a key risk, most do not expect it to threaten deal activity. Similarly, respondents expect little impact on deal-making from US tax reform in the near term.

The survey also found that digital challenges, especially new technologies — as well as the potential threats from digitally savvy competitors — are driving transformation plans.

Acquiring talent with the right skills to adopt these technologies is another common strategic reason for making acquisitions.

Read the full report here.

EY legal services contacts:

richard-norbruis

 

Richard Norbruis – Global Transaction Law Markets Leader