A predictor of future merger and acquisition activity, shows an 18 percent increase in year-over-year early-stage global M&A activity, with particularly strong performance in Europe, Middle East and Africa (EMEA) and Latin America, according to Intralinks Holdings, Inc.'s Q3 2013 Intralinks Deal Flow Indicator (DFI).
With overall deal flow only slightly below the very high level seen in the previous report, indications are that there is a sustained recovery underway in the global M&A market.
“We expect the growth in global M&A activity to continue unabated into 2014,” said Matt Porzio, vice president, M&A strategy and product marketing at Intralinks. “The DFI data indicates year-over-year growth in all geographies, with EMEA showing a dramatic 35 percent rise in deal activity, spurred by a strong performance across Europe. We usually see a seasonal dip in M&A activity in the third quarter data, but 2013 is proving to be a year of sustained growth, and 2014 looks set for a strong start.”
In September 2013, Intralinks conducted a separate survey of 2,400 global M&A professionals in which 67 percent of buy-side professionals and 75 percent of sell-side professionals reported expecting overall M&A deal volumes to increase over the next 12 months, reinforcing the view that global M&A markets will continue to be very active.
Deal Flow Indicator Highlights
The Intralinks DFI tracks global sell-side mandates and deals reaching due diligence prior to public announcement, providing a leading indicator of global deal activity.
The DFI is based on Intralinks’ insight into a significant percentage of early-stage M&A transactions.
Independent research shows that the Intralinks DFI is a reliable indicator of future M&A activity about six month before deals are announced.
Despite some political and economic uncertainty in the US, North America showed a 7 percent year-over-year increase in M&A activity. The quarter-over-quarter decrease of 8 percent followed an exceptionally strong previous quarter.
The spate of large, international deals in Q3 will likely continue through the rest of this year, driven by continued activity in the US.
While an ongoing US budget impasse will likely not suppress M&A activity, a failure by the US Congress to approve raising the debt ceiling would likely have profound negative consequences for global deal activity.
Europe drove a spectacular 35 percent jump in EMEA year-over-year deal activity, with quarter-over-quarter growth up 1 percent even following a strong previous quarter.
All regions of EMEA showed double digit year-over-year gains, with particularly strong contributions from Germany, France, Benelux and Spain.
Latin America deal volume grew by 21 percent year-over-year (and a 2 percent quarter-over-quarter increase), while Asia Pacific grew 9 percent year-over-year (down 3 percent quarter-over-quarter).
In both markets local deal activity more than made up for a lower levels of activity from large foreign corporates.