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16 Apr, 2018

M&A Deals Could Reach Record Level in 2018

M&A Deals Could Reach Record Level in 2018

Mergers and acquisitions bankers could see a record year for activity, with more than two-thirds of large companies globally expecting to complete more deals this year than in the previous 12 months.

After flurry of mega-deals pushed M&A activity to a record in the first quarter of 2018, with $1.12tn of deals announced globally, according to Dealogic, the strong start to the year is expected to continue.

Steve Krouskos, global vice chair of transaction advisory services at Big Four accountancy firm EY, said: «Earnings are strong and every company is actively managing their portfolio. There is more and more cross-border activity, firms are having to acquire as technology threatens their business model and private equity is back in a big way.

«I think it will be a great year, one of the top three if not a record.»

This optimism is shared in boardrooms around the world. EY’s Global Capital Confidence Barometer, a survey of 2 500 senior executives at large companies globally, found that 67% expect their firm to complete more deals over the course of this year than in 2017. That compared with 33% who said the same last year.

The US market was «very strong» in the first three months of the year and the expectation is that this will continue, Krouskos said. However, contrary to what EY dubbed «market sentiment», an expected boost in deals from President Trump’s tax reforms has so far failed to materialise. Only 4% of respondents to EY’s survey said they would use any gains from the tax reforms to fund growth or acquisitions.

Krouskos said: «It's a complex issue, so some companies are still trying to digest the reforms, but we also hear concerns about whether these changes might be reversed if there’s a new President in two years' time.

«We think those concerns are not well-founded, and when they realise the tax changes are here to stay, companies will start accessing the gains appropriately.»

Read more about M&A: DD Check List, Mandate F. A. Q.

Company Valuation: Part 1, Part 2, Part 3, Part 4, Part 5, Part 6, Part 7, Part 8

Some ideas about capital-raising strategies: Bringing Your Company Public, Exploring Alternative Capital-Raising Strategies, Refinancing and Minority Equity as Partial Exit Strategies, 5 Alternatives To IPOs, How to Raise Capital For a Company in Financial Troubles, 7 Private Equity Strategies

M&A forecasts: M&As In 2018, Last Year M&A Review and New Year Outlook, How to Raise Capital For a Company in Financial Troubles

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