6 Big M&A Market Trends to Watch in 2014
While uncertainties remain, the M&A market in 2014 is slowly, but surely recovering. Here are six M&A market trends to watch in 2014.
24 March 2014
While uncertainties remain, the M&A market in 2014 is slowly, but surely recovering – data from the Q4 2013 Intralinks DFI Report reveals a 17 percent increase in year-on-year early-stage global M&A activity.
A momentum for dealmaking in 2014 can be attributed to positive indicators like a return to anticipated growth in the Eurozone and increased global economic stability.
Over the last several years we’ve observed some new, emerging trends in dealmaking globally. Here are six M&A market trends to watch in 2014:
- M&A Professionals Adopting Online Deal Sourcing Networks - Everyone wants to save time, and to make the M&A process more efficient, dealmakers are adopting Online Private Market Networks (PMNs) and M&A social platforms to source deals and opportunities. Deal sourcing networks like Intralinks Dealnexus™ represent the future of how M&A professionals are sourcing deals and matching qualified buyers and sellers.
- Companies Now Flush With Cash - These dealmaking trends have transferred into the corporate finance world too, leaving many of these companies with increased capital. Most stock exchange indices posted sizeable gains in 2013, with the FTSE All-World Index up 19%, the US S&P 500 Index up 26% and the Japanese Nikkei 225 Index up 52%. The bond market is also full of life, with high-yield bond issuances in 2013 reaching new highs as companies took advantage of the low interest rates and investors’ hunt for yield. Much of this capital raising was either opportunistic or acquisition-related, and most likely corporates will put that capital to work in the short-term.
- Investor Enthusiasm for Emerging Markets - One of the global regions that garnered significant investor interest was Africa, mainly because of its attractive population trends, such as a growing middle class, a predominately young populace and high fertility rate. Africa may bring big opportunities for businesses looking to sell goods and services to an increasingly flourishing population. Asia too has a growing middle-class, but unlike Africa, less appealing demographics due to an older population and a lower fertility rate. Latin America’s and Africa’s economies (with the exception of Venezuela) are quickly developing. Overall, growth rates in early-stage M&A activity in the Middle East and Africa are among the highest in EMEA we’ve seen.
- The M&A Market Becoming More Global - The M&A market is becoming more international, with an increase of cross-border deals. Even countries which had somewhat low levels of cross-border M&A, such as Japan, are increasingly opening up.
- Consolidation Among Advisors - Interestingly, over the past five years, there has been consolidation among advisors, with advisory firms having to do more with fewer resources. They’ve had to become more reliant on technology, like a virtual data room, to make the M&A process more efficient and close deals quickly.
- Corporate Development Departments Seeking M&A Technology - Corporate development departments within companies actively engaged in M&A are increasingly using cloud-based technology tools to manage their pipeline of buy-side deal opportunities. These tools, such as Intralinks Deal Manager, provide a secure, easily accessible and searchable repository of all deal-related information, with dashboards to show business intelligence on deal status and progress for deal professionals and senior management/boards.
All of these trends are very positive for M&A. In fact, in December 2013, Intralinks conducted a global survey of more than 1,900 M&A professionals to understand their perception of the deal market in 2014. The results of the Global Sentiment Survey found that over 64 percent of M&A professionals are optimistic about the 2014 market, with over 67 percent reporting that they expect their companies to be involved in more M&A deals compared to six months ago.
This view was consistent across all regions, reinforcing our belief that the global M&A market will continue to improve in 2014.
Philip Whitchelo is Intralinks’ Vice President of Strategic Business & Corporate Development