Private Equity Fuels M&A Activity to Yet Another New High for Q4 2018, Despite Regional Imbalances

The mergers and acquisition (M&A) market appears to be ending the year on a record new high— according to the newest Q4 2018 edition of the Intralinks Deal Flow Predictor, just released.

9 August 2018

Global M&A Activity

The mergers and acquisition (M&A) market appears to be ending the year on a record new high— according to the newest Q4 2018 edition of the Intralinks Deal Flow Predictor, just released.

An analysis of data from Thomson Reuters and Intralinks indicates that M&A activity is continuing its Q3 track fueled by record amounts of private equity (PE) dry powder competing with deal-hungry corporate acquirers. Globally, however, an unbalanced forecast may temper the M&A feeding frenzy. 

M&A growth bounces back after a short dip

While in Q1 2018 the worldwide number of M&A deals had a 5 percent growth year-over-year (YOY), the number fell by 6 percent YOY for Q2 2018. 

For 2H 2018, however, our predictive model forecasts the worldwide number of announced deals to be at 7 percent YOY — with a range of 0 percent to 14 percent.
This comes ten years after the global financial crisis, five years into the current M&A upcycle, two years after the Brexit vote and 16 months into the Trump presidency. 

Leading the charge: RE, TMT and Telecoms

Over the next six months, worldwide deal announcements in Real Estate, TMT (Technology, Media and Telecoms), and Industrials sectors are predicted to show the strongest growth, at 3 percent YOY expected for the FY 2018 in the (within a range of 0 percent to 7 percent). 

APAC takes the driver’s seat. Again.

While the rest of the world showed a 6 percent decline in YOY growth in 1H 2018, the 2H 2018 forecast for the Asia-Pacific region (APAC) dominated with 12 percent YOY growth in the actual numbers of announced deals.  

For the next two quarters, we expect APAC to account for a whole 94 percent of the increase in announced deal counts worldwide.

Private equity’s skyrocketing may have a ceiling

As in Q2 2018, private equity (PE) remains the fuel to the M&A steep rise. Flush with capital amidst low interest rates, PE has been compressing deal timespans to record levels and driving up valuations. A strong global economy, low inflation and low interest rates are all positive signs for the M&A market — for the short-term.

However, we still believe the market may be nearing a cyclical peak. The imbalance of M&A activity across regions, with global equity markets remaining 5 percent below their January 2018 high, the growing threat of a full-blown international trade war between the US, China, and the EU, the increasing probability of a disorderly Brexit and the increasing protectionism around the world all remain mitigating factors.

Find out more in the Q4 2018 edition of the Intralinks Deal Flow Predictor.

Independently verified as a highly accurate six-month forecast of M&A activity, the Intralinks Deal Flow Predictor report is compiled by tracking early-stage M&A transactions globally that are in preparation or have begun due diligence. 

Download your copy here.

Along with our forecast of M&A activity for the next six months, the latest issue of Intralinks Deal Flow Predictor includes:

  • A spotlight feature on how high M&A valuations are affecting dealmaking
  • An interview with Rupesh Khant, vice president of ICICI Securities, on the outlook for the Indian IPO market
  • Regional data on how long M&A deals are taking to complete due diligence and their volume of due diligence information

Philip Whitchelo

Philip Whitchelo

Philip Whitchelo is Intralinks’ Vice President of Strategic Business & Corporate Development