The Intralinks Deal Flow Predictor (DFP), an indicator of future mergers and acquisitions (M&A) announcements, forecasts modest growth for the volume of global M&A deals announced through the first quarter of 2016.
M&A volumes are predicted to increase by about seven per cent through the first quarter of 2016 compared to 2015. The sectors predicted to have the most growth are consumer, healthcare, high-technology, and real estate, while the energy & power, industrials, and telecom sectors will see a decrease.
“2016 is shaping up to have a modest, but good start for global M&A deal announcements, coming off of what we’re predicting to be a record breaking year in 2015,” says Matt Porzio, vice president of M&A strategy and product marketing at Intralinks. “Based on our insights into early-stage M&A activity, we are predicting modest global growth due to uncertainty in North America over interest rates and the economic slowdown in China. Latin America appears to be staging a recovery, showing the highest increase in M&A activity in more than 18 months.”
While Intralinks predicts that 2015 will be a new record year for global M&A announcements, dealmaking confidence for 2016 appears to have weakened in North America (NA) and Asia Pacific (APAC) driven by concerns over a China-driven global economic slowdown, fears of a further correction in global equity markets and confusion among dealmakers over the pace and timing of expected US interest rate rises.
Latin America (LATAM) stands out the most, with early stage M&A activity growing nearly 49 per cent. Early-stage deal activity in Europe, Middle East and Africa (EMEA) has accelerated, growing by 11 per cent, compared to nearly seven per cent in the previous quarter. APAC has shown only a small increase in early-stage M&A activity with growth of about three per cent, reflecting fears of a Chinese economic slowdown and the turmoil in Chinese and emerging market equities over the summer. NA saw a reduction in early-stage M&A activity of three per cent, due to fears over a slowing U.S. and global economy and confusion among dealmakers over the pace and timing of likely future interest rate increases by the US Federal Reserve.