M&A markets well-positioned for Q1 2018, but political and financial threats loom
16 November 2017
The latest edition of the Intralinks Deal Flow Predictor quarterly report is now available! Independently verified as a highly accurate six-month forecast of M&A activity, our most recent analysis provides proven predictions for announced M&A activity through Q1 2018.
Last quarter, worldwide early-stage M&A activity rose 5 percent year-over-year (YOY). Concurrently, Q3 2017 announced deals increased by 12 percent YOY. Our predictive model forecasts that the number of worldwide announced M&A deals for Q1 2018 will increase by approximately 2 percent compared to Q1 2017, with up to 6 percent YOY growth a possibility. Our most recent analysis upholds last quarter’s prediction that the total number of announced worldwide deals in the full year 2017 (FY2017) will exceed 50,000, setting a new record.
Download your copy of the report to get:
- Global and regional M&A predictions for Q1 2018 including heat maps on sector activity
- A global snapshot of new, actionable buy-side and sell-side M&A opportunities
- A spotlight feature on the GDPR and its impact on M&A transactions
- An interview with Noah Waisberg, CEO and Co-Founder of Kira Systems, and Chris Perram, CEO of FileFacets, on artificial intelligence and machine learning in M&A
Highlights and trends through Q1 2018
Worldwide, over the next six months, the strongest growth in deal announcements is predicted to come from the healthcare, materials and real estate sectors.
- Asia Pacific (APAC): Early-stage M&A activity was up 26 percent YOY, while the number of announced deals rose 12 percent YOY in Q3 2017. We predict that announced deals will increase 14 percent YoY in Q1 2018. Early-stage M&A activity increased in all APAC regions, including Japan, which logged its first quarter of growth since Q4 2016. We expect the strongest increases in announced M&A deals in Q1 2018 to come from the real estate, materials and consumer & retail sectors in Southeast Asia, India and North Asia (China, Hong Kong and South Korea).
- Europe, the Middle East & Africa (EMEA): While early-stage M&A activity increased 7 percent YOY in Q3 2017, the number of announced deals rose by only 1 percent YOY. Our model predicts that EMEA is expected to show a 6 percent YOY increase in announced deals in Q1 2018. The UK and Germany trailed the rest of the region, with YOY declines in Q3 2017 early-stage M&A activity of 5 percent and 10 percent respectively. We expect the strongest increases in announced M&A deals in Q1 2018 to come from the materials, real estate and healthcare sectors in Eastern Europe, the Middle East, Africa, Northern Europe, Spain and Italy.
- Latin America (LATAM): Early-stage M&A activity showed strong growth of 30 percent YOY in Q3 2017. However, the number of announced deals in Q3 2017 only rose by 3 percent YOY, leading our predictive model to forecast a modest increase in Q1 2018 announced deals of approximately 3 percent compared to Q1 2017. LATAM’s economy has rebounded in 2017 and is predicted to increase steadily over the next two years. We expect the strongest increases in announced M&A deals in Q1 2018 to come from the healthcare, technology, media and telecoms sectors in Mexico, Peru and Brazil.
- North America (NA): Early-stage M&A activity fell by 7 percent YOY, while the number of announced deals rose by 25 percent YOY. Quite a divergence. Financial conditions look healthy, but rising US interest rates and concerns among US legislators, businesses and dealmakers about a Trump administration assault on NAFTA likely contributed to the drop in early-stage M&A activity. A very strong Q1 2017 comparison period has also contributed to our prediction of an 11 percent YOY decline in the number of NA announced deals in Q1 2018. What growth there is, is expected to come from the healthcare and energy & power sectors.
A combination of a gradual acceleration in global economic growth, low inflation in advanced and emerging economies, buoyant asset markets and low-interest rates continues to bolster the M&A markets. Although economic and monetary supports appear strong, political and financial threats still loom. Economic nationalism, protectionism and restrictions on global trade and cross-border economic integration represent real and significant threats to continued growth. With global equity markets at record highs, and almost nine years since the last major trough, we should also not overlook the possibility that a correction that turns into a more serious sell-off could threaten M&A markets in 2018.
If you want to know the future of global M&A six months ahead of everybody else, download your copy of the Intralinks Deal Flow Predictor here. This quarter’s edition also includes a spotlight feature on the GDPR and its impact on M&A transactions, and an interview with two pioneers of artificial intelligence and machine learning in M&A.