Global M&A Survey Predicts Positive Outlook for Mergers and Acquisitions

That said we’ve also had the ever-present threat of double dip recession, governmental promises of austerity and the problems surrounding sovereign debt in Europe. So the big question is what does the next twelve months hold for the global M&A market?


23 August 2010

In the first half of the year, we could all be forgiven for harboring a small degree of optimism. If you look at the global M&A market according to analysis undertaken for the first half of the year by Mergermarket, there were announced a total of 5,062 deals worth around $883 billion, an increase of around 14% compared to the same period in 2009. That said we’ve also had the ever-present threat of double dip recession, governmental promises of austerity and the problems surrounding sovereign debt in Europe. So the big question is what does the next twelve months hold for the global M&A market?

Although I’m inclined to be positive, when the investment banks can’t agree on the outlook, as discussed in the Financial News article “Deutsche Bank predicts flat year for M&A”, then I think we can safely say that nothing these days is certain.

Intralinks Global M&A SurveyI’m going to park myself well and truly on the fence and simply let you make up your own mind where we’re heading. But I won’t leave you to your own devices, heavens no, I’m going to give you the results of our 2010 Global M&A survey to help you decide.

Produced in association with Mergermarket, the survey interviewed 160 M&A practitioners drawn from Europe, North and South America, Japan, Australia and South East Asia and represented the corporate, financial, legal and private equity communities. Click here to download the full report.

The headline results are positive, some 78% of respondents expect the level of deal making to in their region to improve over the next 12 months. Although given the fact that M&A volume levels have been depressed for much of the last 18 months that’s not really a surprise.

Our friends in Private Equity are predicted to continue making a comeback with 72% of respondents expecting the level of private equity activity to increase in the coming year, as is cross-border deal making. Some 70% of respondents expect an increase in cross-border deals, with the APAC region predicted to see the most significant levels of this type of transaction.

In terms of hot sectors both Telecoms Media and Technology (TMT) and Energy, Mining and Utilities are predicted to witness the bulk of deal activity. It’s interesting to note that there is a clear geographical divide on this subject, with Asian and European respondents predicting TMT and North and Latin American suggesting Energy, Mining and Utilities. The Asian response is a little surprising given that the commonly accepted wisdom is that China and India have not yet sated their appetites for raw materials and energy companies. Overall, other sectors predicted to witness deals are financial services, pharmaceutical and consumer.

However, the responses to the constraints and drivers to deal highlight the uncertainty in the market. In total, 52% of respondents consider improved market and financing conditions to be the primary driver to any increase in M&A activity. Yet when asked what the constraints to deal making would be, some 71% suggested that difficult economic and financial conditions were the main factors. What’s clear is the economic environment will make or break this year’s activity.

Most pleasing to us all at Intralinks are the responses to some of our questions around using virtual datarooms. It’s clear that it’s now universally accepted that using a virtual dataroom on an M&A transaction speeds up the process, reduces cost and adds security. What’s also interesting is what features practitioners consider to be important in these tools, the answers demonstrate how tools like Intralinks are evolving into sophisticated deal management tools, with enhanced features such as built in workflow processes, enhanced reporting functionality, online Q&A and mobile access scoring highly. If you’re interested in knowing more about recent trends in technology for M&A you should take a look at the recent Forrester Consulting thought leadership paper Intralinks commissioned back in May for some really in-depth insight.

mergermarket WebcastIf after reading the results of our global M&A survey you’re still undecided about what this year holds for M&A, then why not take a look at the replay of our recent M&A webcast imaginatively titled “An outlook on Global M&A activity”. The webcast hosted by Mergermarket featuring a panel of 5 senior M&A practitioners discussing their thoughts on the M&A market in 2010 and our survey results click here to watch the replay.