– Year-over-year growth in worldwide M&A announcements predicted to tick up to
The Intralinks Deal Flow Predictor, an indicator of future mergers and acquisitions (M&A) announcements with a proven track record for accuracy, forecasts that the worldwide number of announced deals will increase by 8% year-over-year (YOY) during Q2-Q3 2018. The strongest growth in worldwide deal announcements is expected to come from the industrials, TMT (technology, media and telecoms) and real estate sectors. Growth in M&A activity is not evenly spread, however, with the Asia-Pacific (APAC) region dominating the growth forecast: 73% of the forecast increase in announced deals over the next two quarters is expected to come from APAC.
“The strongest global economic growth since 2011, low inflation, low interest rates, ready availability of acquisition financing, record amounts of private equity capital and deal-hungry corporate acquirers are combining to drive global M&A activity to new highs”, said Philip Whitchelo, Intralinks’ vice president for strategic business development. He goes on to caution that, “Despite such positive underpinnings, we believe that the near-term risks of an M&A market correction are increasing: the M&A market is in the fifth year of its current up-cycle; valuations are at record highs and 23% above their 25-year average; global equity markets are down 7% since their January 2018 peak; there is a growing backlash against cross-border Asian acquirers in the US, Germany, the UK and Australia; and global trade is under threat from economic nationalism, protectionism and the unwinding of cross-border economic integration, examples being actual and threatened trade tariff barriers in the US and China, Brexit and the renegotiation of the North American Free Trade Agreement.”
The Intralinks Deal Flow Predictor forecasts the number of future M&A announcements by tracking early-stage M&A activity – new sell side M&A transactions that are in preparation or have begun their due diligence stage. These early-stage deals are, on average, six months away from their public announcement.
In Asia Pacific, the number of announced M&A deals is predicted to increase by around 19% YOY during Q2-Q3 2018, within a range of 11% to 27%, led by the industrials, energy & power and TMT sectors. Within APAC, all regions are showing double-digit increases in their volumes of early-stage M&A activity, with North Asia (China, South Korea), Japanand Australia expected to make the strongest contributions to APAC’s growth.
In Europe, the Middle East and Africa the number of announced M&A deals is predicted to increase by around 5% YOY during Q2-Q3 2018, within a range of 0% to 10%. The strongest contributions to EMEA’s growth are expected to come from Eastern Europe, Sub-Saharan Africa and Northern Europe, as well as the materials, real estate and industrials sectors.
In Latin America, the number of announced M&A deals is predicted to increase by around 5% YOY during Q2-Q3 2018, within a range of -10% to 18%, led by the energy & power and financials sectors in Mexico, Peru and Argentina.
In North America, the number of announced M&A deals is predicted to increase by around 2% YOY during Q2-Q3 2018, within a range of -5% to 10%, led by the TMT, real estate and industrials sectors.