Prediction: Here's Where Global M&A Is Heading in H2 20224 August 2022
Despite challenges, our data indicates global dealmakers are taking aggressive deal postures.
SS&C Intralinks has been a leader in applying cutting-edge technologies to due diligence and financial transactions for over 20 years. To date, over USD 34 trillion in global capital markets events, including mergers and acquisitions (M&A), equity/debt, fundraising and restructuring deals, have utilized our services for successful execution.
From an M&A perspective, due diligence on over 13,000 transactions is executed through our platform annually, giving us tremendous proprietary insights into future market movements.
Our propriety SS&C Intralinks Deal Flow Predictor forecasts M&A volume up to six months in advance of a market announcement, as six months is the average time for diligence. This is done through our insights into thousands of deals that come across our global desks annually.
With this information, we’re able to get an early view on the majority of deals that are coming to market, and we utilize that proprietary data to forecast anticipated volume, as will be announced by Refinitiv.
As we anticipated toward the tail of 2021, volatility surfaced in the first quarter of announced volume which took a sharp drop on a quarter-over-quarter yearly (QoQY) basis.
One positive takeaway from this announcement chart is that when we zoom out for a historical perspective, announced volume remained above Q1 resistance levels going back to 2012.
We did, however, see these signs of stress manifest in early stage, pre-announced M&A activity, or deals that were starting diligence in Q1 2022 for anticipated announcement in Q3 of this year.
Our outlook for global quarter-over-quarter (QoQ) deal flow is trending toward the negative end of the floor ranging from -5 to +5 percent for a neutral outlook.
QoQY, we anticipate more downward pressure with an underperform rating for Q3 2022 compared to the same period last year.
This is reflected across the global quadrants we track as inflation, supply-chain issues, interest rates and geo-political pressures are exposing the markets to significant headwinds.
We do have some positive indicators. Despite these challenges, global dealmakers still took aggressive deal postures from our vantage point.
To provide some perspective, the pre-announced Q1 2022 deal flow outpaced every quarter in 2019 and three quarters in 2020 showing M&A activity had a stronger footing, especially compared to other economic indicators such as equity market performance.
We are not providing forecasting information for individual countries. Our regional highlights solely indicate changes in deal volume as seen by SS&C Intralinks in Q1 2022 for the specific countries, compared against the stated periods.
Asia Pacific (APAC)
Global markets are heavily dependent on China, both for imports and exports, and continuing zero-COVID policies reverberated through the region.
Overall, we anticipate a neutral outlook for both QoQ and QoQY in the Asia Pacific region, but we did see some pockets of strength, especially in major markets like Hong Kong.
Our outlook for both QoQ and QoQ yearly for APAC is at a range of -5 to +5 percent, which given the circumstances of the world, is solid footing.
Europe, the Middle East and Africa (EMEA)
EMEA is arguably facing the most compounded challenges — with the Russian invasion stalling food supplies, energy disruption as well as shared global economic challenges.
Given the confluence of circumstances, we anticipated severe impairment to M&A activity, but like APAC, we were surprised with market resilience in the territory.
While we saw heavier downward movement on a QoQY basis, we saw stability or uplift in Q1 QoQ numbers in major markets such as France, Germany, Israel and the U.K.
Our outlook for both QoQ and QoQY for EMEA is at a range of -5 to +5 percent, for a neutral outlook but we may see more synergy and efficiency pressures drive more deals in the region.
Latin America (LATAM)
Volatility returned to Latin America in Q4 2021 and sank even deeper in Q1 2022. While major economies including Brazil and Mexico saw a moderate upward trend in early-stage volume compared to Q4 2021, the region as a whole faced a challenging quarter.
Our forecast for LATAM is steeper than a -5 percent decline for an underperform forecast for both QoQ and QoQY, with Brazil anticipated to experience the largest drop in QoQY volume globally.
North America (NA)
North America has carried global M&A volume historically and had an exceptional 2021 to compete against.
We’re forecasting a steeper than -5 percent decline for both QoQ and QoQY for an underperform rating for the region, but to provide some perspective, the pre-announced NA volume in Q1 beat three quarters in 2020, so from that angle, the region is performing well historically, but faces a challenge keeping pace with 2021 numbers.
For more detailed country information as well as our insights into regional sector activity, please contact your Intralinks rep or download our full report at Intralinks.com/dfp.
Brian S. Hwang is Director of Strategic Business & Corporate Development at Intralinks. Brian joined Intralinks from RR Donnelley Global Capital Markets where he primarily worked with clients in the Midwest and Northeast, consulting on initiatives related to disclosure issues for SEC financial reporting, US Proxy compliance and transactional due diligence. Brian started his career with New York City law firm Wachtell, Lipton, Rosen & Katz, where he was involved in the due diligence and execution of transactions, valued at over $350 billion.
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