KPMG’s M&A Predictor looks at the appetite and capacity for M&A deals by tracking and projecting important indicators 12 months forward. This issue demonstrates that the world’s largest corporates are expected to show an increased appetite for M&A deals and will likely have more capacity to fund prospective transactions in 2015.
Analysts are expecting the world’s largest corporates to show an increasing appetite for deals, with predicted forward P/E ratios (our measure of corporate appetite) 7 percent higher than 12 months ago. The capacity to transact, as measured by forecast net debt to EBITDA, is expected to improve 14 percent over the next year, with the largest companies paying down debt and stockpiling cash.
This rise in both appetite and capacity is already being reflected in the level of transactions completed, with both completed deal volumes and deal values over the last 6 months reversing the downward trend of recent years.