The first quarter of 2018 will see a 2 percent rise in the number of mergers and acquisitions (M&A) globally compared to what was seen in the same period in 2017, predicts the Intralinks Deals Flow Predictor, an indicator for future M&A announcements.
Historically low interest rates, a buoyant asset market, low rates of inflation in the advanced and emerging economies and a slow but steady pickup in global economic growth are the potential drivers that is fostering the dealmaking environment.
There are however risks involved. “The risks to the scenario of steadily increasing M&A activity are twofold: political and financial,” said Philip Whitchelo, VP of Strategy & Product Marketing at Intralinks. “Increases in economic nationalism, protectionism and restrictions on global trade and cross-border economic integration all have the potential to negatively affect dealmaking sentiment. With global equity markets at record highs, and almost nine years since the last major trough, a correction that turns into a more serious sell-off could also prove negative for dealmaking confidence,” he added.
Three out of four global regions, as marked by Intralinks, is being predicted to witness year-over-year (YOY) increase in the number of announced M&A deals in the first quarter of 2018. It has bene predicted that there would be a 14 percent rise in the Asia Pacific (APAC), region, an almost 6 percentage rise in M&A will be seen in Europe, the Middle East and Africa (EMEA), and about 3 percent growth will be seen in Latin America (LATAM). Because of the fact that the first quarter of 2017 was an exceptionally strong period for M&A in the North America (NA), therefore that region has been predicted to record a slow-down of around 11 percent in deal announcements year-on-year.
The prediction for the APAC region is that Southeast Asia, India and North Asia (China, Hong Kong and South Korea) will contribute the most in the growth of M&A In the region even as all of the areas within the regions are exhibiting increasing volumes of early-stage M&A activity. Since the last quarter of 2016, the first quarter of early-stage M&A activity increase was recorded by Japan.
UK and Germany are the two largest areas for M&A globally and they are predicted not to contribute anything to the growth in the EMEA region. There has been a decline of 8 percent y-o-y in the number of announced deals in the first nine months of 2017 in Germany. There was a drop of 5% y-o-y in the early-stage M&A activity in the third quarter of 2017 in the U.K.
For LATAM, this has been the fourth consecutive quarter that there has been an increase in early-stage M&A activity. Liberalization of the energy sector in Mexico, the monetary reforms in Argentina and the enhanced consumption in Brazil and Colombia will be te driving factors for this growth.
(Adapted from Businesswire.com)