The Intralinks Deal Flow Predictor (DFP), an indicator of future mergers and acquisitions (M&A) announcements, forecasts no growth in the total number of M&A deals to be announced globally through the first nine months of 2016 compared to the same period in 2015.
Compared to last quarter, we’re seeing an overall slowdown in early-stage M&A activity, and there is a possibility that the full year 2016 will see an overall global M&A decline compared to 2015.
While the global headline figure appears to indicate a stalling of dealmaking activity, there is a remarkable division when looking at the four global regions. In two regions – Asia Pacific (APAC) and Europe, the Middle East & Africa (EMEA) – early-stage M&A activity grew by nearly 10 percent and 8 percent in Q1 2016, respectively, whereas in Latin America (LATAM) and North America (NA) it declined by 8 percent and 9 percent, respectively.
“We’re starting to see a slowdown in M&A activity in NA and LATAM amid growing uncertainty over the state of the global economy and continued weakness in commodity and oil prices,” said Matt Porzio, Vice President of M&A Strategy and Product Marketing at Intralinks.
“Nevertheless, corporate executives are facing challenges in finding ways to grow in a weak economy with low inflation, and the pressure to continue to do deals could outweigh nervousness. Meanwhile, APAC will continue to grow, as dealmakers target acquisitions to benefit from the region’s fast-growing economies and growing middle class. This may be surprising due to moderation in Chinese growth, and recovering European economies and quantitative easing measures by the European Central Bank (ECB) continuing to support strong levels of M&A activity in Europe.”
The Intralinks DFP also reveals that 45% of respondents in APAC expect to participate in more deals over the next six months than the previous six months, a decline from 56% in the previous survey in December 2015.
Dealmakers in APAC, EMEA and NA are most concerned about a global economic slowdown having an impact on M&A activity in their region over the next six months, whereas dealmakers in LATAM expect commodity and energy prices and monetary policy to have the most significant impact on M&A activity in their region over the next six months.