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Global M&A remains robust

31st Jul 17 10:03 am

EY points out

The global mergers and acquisitions (M&A) market remained strong during the first half of 2017, despite rising protectionist sentiment and increasing intervention in deals by governments and regulators, according to EY data released today.

Global deal value totaled US$1.4t in the first half of the year, a modest decline of 4% against the same period last year. This decline in value can be attributed to a fall in megadeals above US$10b. Deals valued between US$1b and US$10b, the driving force behind M&A globally, remain on par with the same period in 2016. In terms of volume, the first half of 2017 experienced an uptick of 4%, with 18,363 deals compared to 17,642 deals recorded in the first half of 2016.

In the UK, M&A remains very robust with inbound and domestic transactions up 35% on the same period in 2016. M&A in the first half of the year jumped by 60% in US$ terms, from US$68b to US$109b, with a significant boost in outbound M&A offsetting a drop in inbound deal value. Domestic transactions also showed a healthy uptick in value (US$42b vs US$17b). 

The figures for the first six months of the year show a strong deal appetite at a global level despite a highly complex M&A market. Several significant acquisitions were curtailed in 2017 due to pressures from various stakeholders, including activist investors and government authorities. The number of executives that walked away from deals as a result of concerns about regulatory or antitrust issues has almost tripled since 2016 according to the April 2017 edition of EY Global Capital Confidence Barometer.

Steve Ivermee, EY’s UK&I Managing Partner, Transaction Advisory Services, says: “Geopolitical shifts and rising nationalism has brought additional M&A complexity, but companies are overcoming those barriers. Growth remains the number one priority, and M&A is a route to achieve that. However, given the changing environment, dealmakers may need a broader narrative around purpose and the concept of inclusive growth to keep all stakeholders onside.

“The UK’s involvement in global M&A points to UK companies continuing to look abroad for deals and being attractive for inbound acquirers. The outlook for the UK economy and UK’s trading relationships may be uncertain, but many UK companies possess qualities, such as a focus on innovation and global presence, that will continue to make them attractive.”

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