BY Fraser Tennant
The recent levelling off of the global M&A market will lead to a “flat year ahead” for deal flow, according to a new survey by Dykema.
In its "M&A Forecast: 2016 M&A Outlook Survey", Dykema reveals that 47 percent of respondents stated that they expected to see “no significant change” in the global M&A market over the next 12 months - up 43 percent in comparison to last year’s survey.
The survey also found that many executives had major concerns about the effects that corporate tax increases, increased federal regulation and taxation of carried interest could have on M&A in the coming year. Conversely, M&A dealmakers opined that the disruption caused by global events such as the fallout from Brexit and the US presidential election are likely to have a “negligible” effect on deals in 2017.
Moreover, in the case of the US election, survey respondents (by a 2-to-1 margin) indicated that they felt Donald Trump would be more supportive of the US M&A market than Hillary Clinton. However, a plurality of respondents stated that both candidates would have a neutralising effect on US M&A next year.
“When it comes to M&A in 2017, the biggest determining factor is likely the fate of the US economy,” said Thomas Vaughn, co-leader of Dykema’s M&A practice. “It’s not surprising that respondents – seeing a decline in 2016 deal volume after several years of strong growth – are taking a wait-and-see approach.”
Additional findings in the survey include the continued rise in inbound M&A activity to the US due to increased investment from China. In contrast, US outbound activity in China has remained low for the second consecutive year.
“On the international front, the pace of outbound acquisitions by Chinese companies, particularly in the US and Europe, does not appear to be slowing down anytime soon,” said Jeff Gifford, co-leader of Dykema’s M&A practice. “This trend is in large part due to an increasing level of comfort navigating Chinese regulatory bodies and growing confidence that these deals will go through successfully.”
While overall the survey does suggest a subdued outlook for the global M&A market in 2017, respondents also displayed a fair degree of optimism in relation to certain segments of the market, such as the energy, healthcare and technology sectors, which they say are grabbing increasing attention from M&A practitioners.