Record 2016 for M&A against all odds

Despite major political disruption from events such as Britain leaving the EU and the election of a new president of the United States, 2016 is gearing up to be the biggest year for M&A deal announcements since 2007.

According to the Intralinks Deal Flow Predictor, which has a proven track record for accuracy, there will be a three per cent increase in the total number of M&A deals to be announced globally in FY2016 compared to 2015.

Throughout the run-up to the EU referendum and the US election, M&A expectations were low for the remainder of the year. Historically, M&A activity slows in quarter three of a US presidential election year, with dealmakers waiting to see what policies the new president might introduce. However, this year was an exception, which is all the more surprising given the controversial nature of the Trump and Clinton campaign, and especially following the unexpected result.

In the UK, the economic slowdown in the aftermath of Brexit fortunately did not materialise in the third quarter and the region has gone on to have one of its best performing years for early stage M&A activity. The UK has strong levels of asset disposals in other European countries such as France, Spain and Germany as well as the declining pound, making British companies a lot cheaper internationally, to thank for the eight per cent rise. To put this into perspective, the second quarter, which saw the lead up to the referendum, saw a decrease by one per cent.

While Europe, the Middle East & Africa, Asia-Pacific and North America saw increases in early-stage M&A activity, up 13, nine and five per cent respectively, Latin America, Australia and Japan have posted declining early stage activity levels. This varying activity mainly comes down to the new industries of interest. For example, Australia is still struggling to find an alternative to the metals and mining sector.

Across the world, the strongest sectors for early stage activity include energy & power, technology, real estate and media telecommunications, which have all increased by double-digit percentages. These emerging sectors coupled with the predicted increased activity means 2017 is gearing up to be another record-breaking year for global M&A.

Stay tuned to our blog for M&A news and remember to get in touch with our experienced team with any questions you have about the M&A process and how Benchmark International can help you.

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