Survey: Global M&A Deal Sentiment Still Strong
The Intralinks Global Sentiment Survey, gathers M&A professionals’ sentiment about the future of the M&A market, and reveals that 67 percent are optimistic.
28 July 2014
For the first time since 2010, overall mergers and acquisitions deal volume is up globally, with an overall increase of six to ten percent, compared to 2013. So says data from latest Intralinks Deal Flow Indicator (DFI).
The Intralinks DFI is an exclusive, predictive look at future global M&A activity. It typically forecasts M&A deals that will close and be announced in about six months.
We still conduct the Intralinks Global Sentiment Survey, which gathers data about industry professionals’ sentiment and views around the future of the M&A market. The results of this quarter’s sentiment survey of 1,000 global M&A professionals revealed:
- Overall, 67 percent of M&A professionals are optimistic about the current deal environment, consistent with reported sentiment from the last two quarters
- Seventy-seven percent predict M&A activity will increase over the next six months, consistent with last quarter reported findings and with the Intralinks DFI data
- North American respondents again expressed the most optimism about future deal activity in 2014, with 80 percent expect an increase, while respondents in Latin America continue to show the most pessimism, with only 37 percent expecting increased deal activity through the remainder of 2014
In addition, we asked a few pointed questions about current trends we’re seeing in the market. These trends include a possible tech bubble, the number of mega-deals, and whether political interference could affect M&A activity.
- Despite indications from recent deal activity, only 57 percent of respondents see a sign of a tech bubble. Interestingly, 71 percent of United Kingdom respondents thought the recent deals and tech company valuations were a sign of a tech bubble.
- Many dealmakers have been discussing the number of mega-deals already announced in 2014. But only half of survey respondents think this is a sign of more mega-deals will be announced through the end of 2014.
- While we know that the political environment can affect M&A activity globally, 62 percent of survey respondents stated that they do not expect a change in political interference in M&A activity over the next 12 months
Dealmakers continue to have doubts about deal valuation, which survey respondents all agreed was the greatest impediment to getting deals done. Valuation can quickly become a significant issue and impact successful deal completion. If there is a discrepancy in valuation (either on the acquirer’s side or the seller's side) it can expose the deal to greater risk. This can potentially extend the overall deal completion duration, increase the risk of overpaying for targets, and impact earnings.
It will be interesting to see if these trends continue through the remainder of the year.