In an age of M&A complexity, do you pause or proceed?

14H05763_RF.jpgOur latest M&A report notes that regulation, trade and tariffs may foster a deal hiatus for some, while many others move forward with acquisition plans. What does all this mean for the deal market? The speed of change is relentless and M&A has proven to be an effective means to move quickly to gain competitive advantage or defend against future disruptors.

Pause or proceed? For more than three years the Global Capital Confidence Barometer has consistently predicted heightened M&A intentions (which have been borne out with record dealmaking in the market). The fall in corporate appetite to acquire we report in this edition is perhaps not surprising. M&A appetite remains robust on the whole and many companies will proceed with dealmaking plans as they look to gain competitive advantage. Some companies, however, have opted to pause. They haven’t left the deal table permanently — they just want a timeout.

Why?

Two key reasons:

  • Some will want to fully assess the changing landscape internationally and the implications before firming up future deal plans. Regulation, tariffs, NAFTA, Brexit — these are all issues creating uncertainty. Depending on their sector or location, some companies will have a greater sensitivity to how these issues are resolved. They are awaiting more clarity before they continue M&A.
  • Some companies also need some respite to fully integrate the deals they have undertaken in the past three years. A lot of deals have been done and — as our survey shows — a number of companies have a renewed focus on ensuring deal integration delivers the right synergies and value (see “Spotlight” on pages 10 and 11). Sometimes a break between courses is needed to make a meal more enjoyable.

What does all this mean for the deal market? The speed of change is relentless and M&A has proven to be an effective means to move quickly to gain competitive advantage or defend against future disruptors.

That still holds true.

We may see fewer deals in the near term. The next 12 months will probably not be as strong as the last 12. But the M&A imperative remains and those companies opting for a dealmaking timeout now will return to the deal table at some point soon.

Read the full report here.

EY legal contact:

Jean-Christophe Sabourin

 

Jean-Christophe Sabourin – Global Law Transaction Leader