Looking ahead to 2016, Intralinks recently published its Deal Flow Predictor report (the Report) for Q1 2016, which tracks global, early-stage M&A activity in order to predict M&A deal volume in the coming quarter.
Based on early-stage deal activity moving into 2016, the Report forecasts modest, positive momentum for M&A activity in Q1 2016, but such activity is unlikely to match the record increases in dealmaking seen in 2015. With respect to worldwide M&A activity, the Report predicts that the total number of announced deals in Q1 2016 will be between 6% to 8% higher than in Q1 2015. Driving factors for M&A activity largely remain the same as before and include the low cost of credit and a persistent low inflation, low growth environment, pushing corporations to achieve growth through inorganic means.
While the global climate for M&A is generally positive, M&A activity may be hampered by economic headwinds in some regions. In North America, for example, where early stage deal activity was down by 3% in Q4 2015 compared to the previous quarter, there is a sense of economic uncertainty due to mixed economic indicators and the timing and magnitude of interest rate increases.
The Report also notes that the Asia Pacific region is facing slowing M&A growth as a result of turmoil in the Chinese equity markets and the devaluation of the Chinese Yuan, among other things. This picture in Latin America and Europe, the Middle East, and Africa is more positive, with early stage deal activity in Latin America staging a rebound after some softer quarters and continuing momentum in Europe, with France and the United Kingdom being particularly noteworthy.
As for global sentiment, the Report’s survey of 575 M&A professionals found mixed perceptions of the current climate for M&A, with respondents’ views varying from region to region. For example, 55% of respondents in the Europe, Middle East and Africa region expressed optimism about the current M&A client, while only 43% of North American respondents shared this view.
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