M&A expected to make a strong resurgence by mid 2014
Global M&A deal volumes are forecast to reach 8,000 deals in the second quarter of this year, according to Deloitte’s M&A Index. This is an increase of nearly 10% from 7,250 deals a year ago. The forecast also puts deal volumes for the first half of this year at approximately 15,700, the best start to an M&A year since 2011.
Iain Macmillan, head of M&A at Deloitte commented: “The M&A markets are bursting back into life, with over $500bn worth of deals announced in the first two months of 2014 alone. Strong economic growth forecasts in major western economies and greater confidence in policy is having a positive effect on M&A market sentiment.
“However, while the S&P 1200 share price index is at an all-time high, revenue growth has declined by 3% since 2012. Under pressure to stem this fall, M&A activities are seen increasingly as providing a compelling way to enhance revenues and profits.”
European companies were involved in 35% of all global deals by disclosed values in the first quarter of 2014, up from 27% during same period in 2013. This trend is consistent with the 15% drop in cash reserves of European companies from $930bn to $822bn.
Meanwhile, the technology, media and telecommunications (TMT) sector saw the most activity in the first quarter of 2014 with total deals worth $174.3bn, compared to $105.7bn in the first quarter of 2013.
Iain Macmillan concluded: “With the ongoing revolution in digital, it is not surprising that the TMT sector is at the forefront of deal making activities. We have seen cross industry convergence as TMT companies look outside of their current business models for growth. We expect this theme to drive significant transaction volumes for the rest of 2014 and beyond.”
The Deloitte M&A Index is a forward-looking statistical indicator that forecasts future global M&A deal volumes and identifies the factors influencing conditions for deal activities.
