Worldwide M&A activity predicted to accelerate over the next six months


9 May 2018

The Q3 2018 edition of the Intralinks Deal Flow Predictor report has just been published. Independently verified as a highly accurate six-month forecast of merger and acquisition (M&A) activity, our most recent report provides proven predictions for announced M&A volumes for Q2-Q3 2018.

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 across the world 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.

M&A market hitting new highs in 2018

According to Thomson Reuters’[1] data and Intralinks’ own analysis, the worldwide number of announced M&A deals rose by 5% year-over-year (YOY) in Q1 2018, a slight drop from Q4 2017’s 6% YOY growth. Based on the levels of early-stage M&A activity which Intralinks has seen in the past six months, our predictive model is forecasting that over the next two quarters YOY growth in the worldwide number of announced deals will accelerate to 8% (within a range of 1% to 16%). Over the next six months, the strongest growth in worldwide deal announcements is expected to come from the Industrials, TMT (technology, media and telecoms) and real estate sectors. For the first nine months of 2018, Intralinks is forecasting that over 41,000 M&A deals will be announced worldwide, a new record.

Lopsided growth

Growth in M&A activity is not evenly spread, however, with the Asia-Pacific region dominating our growth forecast: 73% of the forecast increase in deal count over the next two quarters is expected to come from the Asia Pacific region.

Market drivers

M&A activity is being underpinned by the strongest global economic growth since 2011, low inflation, low interest rates, ready availability of acquisition financing and record amounts of private equity capital competing with deal-hungry corporate acquirers looking to juice up their top-line growth.

Nothing lasts forever

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 (especially Chinese and 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 (e.g., US and China trade tariff barriers, Brexit and the North American Free Trade Agreement renegotiation).

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 to read:

 

 

 

  • Global and regional M&A predictions for Q2-Q3 2018 and sector activity heat maps
  • A spotlight feature on private equity dealmaking
  • An interview with Philip Thomas, Partner at law firm Reed Smith LLP, on how the GDPR will affect M&A


[1] http://dmi.thomsonreuters.com/Content/Files/1Q2018_MA_Review_FinancialAdvisors.pdf



Philip Whitchelo

Philip Whitchelo

Philip Whitchelo is Vice President for Strategic Business Development at Intralinks