For the past three quarters, we have seen M&A activity in the consumer markets stumble after a quick start in the first half of 2015. This stumble is primarily due to the global economic conditions and uncertainty with the consumer. Global M&A volume is down 18% from the fourth quarter of 2015. The Asia Pacific corridor was down 33% from the fourth quarter of 2015 due to continued weakness in China. Although, business confidence continued to recover in the Asia Pacific region as commodity prices are stabilizing, the recovery may take a long time as other consumer indicators are still weakening. In the Americas, deal volume was down 15%. US business confidence is stable but consumer spending is weakening as deposits are increasing; improvement may be around the corner. Brazil, normally the M&A leader in South America, has an economy that is drifting downwards with no help in sight until a new administration is put in place and new budgeting controls are put in place – which may be 18 months from now. European deal volume was also down 15%. Continued sluggishness in Europe is hampering growth and consumer spending; business confidence fell in Western Europe fell to its lowest levels in the first quarter of 2016. Therefore, expect the rest of the year in Europe to be not particularly upbeat.
Major global disruptors have been dragging down M&A activity in the consumer markets space. Although there are signs of hope in certain pockets of the world, overall global economic sluggishness and geo-political volatility add to consumer uncertainty. And it may be a while for the consumer to revive the market and stem M&A growth.
Read the full report in M&A Matters
For further information please contact :
Rob Coble, KPMG in the US
Robert Ernst, KPMG in the US