M&A Predictor | KPMG | SG

M&A Predictor

M&A Predictor

2016 deal value remained robust in comparison with pre-2015 levels and cross-border deals remain very healthy.

2016 deal value remained robust in comparison with pre-2015 levels and cross-border...

Overall, the volume and value of M&A transactions in 2016 is down from the record highs achieved in 2015. Nevertheless, 2016 deal value remained robust in comparison with pre-2015 levels and cross-border deals remain very healthy.

The top 100 global deals are dominated by the United States, led by the pending US$107.8 billion takeover of Time Warner by AT&T. In total, the United States accounted for 54 of the top 100 deals in terms of target, and 45 of the top 100 in terms of bidder.

Over one-third of the top 50 cross-border deals also involved targets in the United States, but bidders were more evenly spread, with deals originating from many different countries.

Several of the themes that emerged in 2015 provided tailwinds for M&A in 2016, including near-zero interest rates and companies looking to M&A to fuel growth and combat slowing momentum in the global arena. Thematically, economic and political uncertainty drove anemic volume in the first half of the year. However, the anticipated rate hikes and uncertainty around policy shifts in 2017 have helped to make Q3 and Q4 record quarters for mega-deals.

Following the U.S. election, the potential pro-business political environment, in the form of tax and regulatory reforms, could be a strong driver of 2017 M&A activity.

October proved to be a record month, with nearly half a trillion dollars of M&A announced globally. Record-breaking volume was driven by CenturyLink’s US$34 billion acquisition of Level 3 and the merger of GE’s oil and gas division with Baker Hughes, as well as the AT&T/Time Warner mega-merger. However, President Trump has vowed to block the AT&T and Time Warner deal, further providing uncertainty for all mega-deals announced in the second half of 2016.

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